Iraq, British BP signed deal to develop four Kirkuk oil and gas fields

BAGHDAD,— Iraq has signed an agreement with British oil giant BP to redevelop four major oil and gas fields in Kirkuk, BP announced Tuesday.

The deal marks a significant step for Iraq, a country where oil production has long been hindered by conflict, corruption, and political instability.

The agreement, which still requires final approval from the Iraqi government, will see BP collaborate with North Oil Co. (NOC), North Gas Co. (NGC), and a newly appointed operator to stabilize and expand production.

BP is expected to invest up to $25 billion over the project’s lifespan, an Iraqi oil official told Reuters earlier this month.

As part of the deal, BP will oversee a drilling program, rehabilitate existing wells and facilities, and develop new infrastructure, including gas expansion projects.

The company’s earnings will be tied to increases in production, market prices, and operational costs, and it will be entitled to book a portion of the reserves and output proportional to its fees.

Production capacity at the four Kirkuk oilfields is set to increase by 150,000 barrels per day (bpd), pushing total capacity to at least 450,000 bpd within two to three years, according to a senior Iraqi oil official.

The Iraqi prime minister’s office stated that Tuesday’s signing came after both parties resolved “technical issues and contractual terms, including the economic model of the project.”

In January, Kurdistan region’s caretaker Prime Minister, Masrour Barzani, voiced criticism of the deal between Baghdad and BP.

“The area covered by the deal with BP is a disputed territory between the Kurdistan Region and Iraq’s federal government. Under the Iraqi constitution, neither Baghdad nor Erbil can make unilateral decisions regarding such areas,” he stated.

BP has a long history in Iraq’s oil sector, having been part of the consortium that discovered crude in Kirkuk in the 1920s. The company estimates that the Kirkuk field contains around 9 billion barrels of recoverable oil.

BP also holds a 50% stake in a joint venture operating the Rumaila oilfield in southern Iraq, one of the country’s largest producing fields.

(With files from Reuters | Agencies)