bp has a long history at Kirkuk (IMAGE SOURCE: Adobe Stock)
Iraq has agreed contract terms with bp for the redevelopment of oil fields at Kirkuk, with work expected to begin in 2025
The deal will see bp invest in various Kirkuk fields, providing oil, gas, power and water rehabilitation work, with the potential for investment in exploration too.
The agreement — subject to final government ratification — is for an initial phase and includes production of more than three billion barrels of oil equivalent (boe). It includes the Baba and Avanah domes of the Kirkuk oil field and three adjacent fields – Bai Hassan, Jambur and Khabbaz – which are currently operated by the North Oil Company (NOC).
In a statement, bp said that the “wider resource opportunity” across the contract and surrounding area is up to 20 billion boe. The value of the work is expected to be worth in the region of US$25bn over the contract period, according to news agency Reuters.
“This agreement builds on our longstanding and strategic relationship with the Iraq government and delivers access to a material new resource opportunity, within one of the world’s most prolific hydrocarbon provinces,” said bp executive vice president William Lin.
The news comes after bp announced that it would ramp up oil and gas production, and scale back renewables investments, as part of a revised growth strategy focusing more on hydrocarbons.
Under the terms of the agreement, bp’s remuneration will be linked to incremental production volumes, price and costs.It will also be able to book a share of production and reserves proportionate to the fees it earns for helping to increase production.
New operator
The intention is to to set up a new operator, initially an unincorporated organisation comprising predominantly of personnel from NOC and North Gas Company (NGC), with secondees from bp. This will take over operations at Kirkuk from NOC, although bp said it later expects to form a standalone incorporated joint venture to hold its interests in the operator. Its first priority will be to stabilise and grow production, with work set to include a drilling programme, the rehabilitation of existing wells and facilities, and the construction of new infrastructure, including gas expansion projects.
bp said the investment will bring opportunity and growth to the Kirkuk region, as well as improving supply chain capability alongside job creation.
“It will enable us to bring our experience of managing giant fields to realise the potential of this important asset for Iraq, working alongside and in close partnership with NOC and NGC,” added Lin. “This opportunity is fully in line with our priority of pursuing new growth opportunities for bp as we strengthen and high-grade our portfolio across the world.”
The deal follows a memorandum of understanding signed by bp and Iraq in July 2024, of which technical terms were agreed in December and the majority of commercial terms in January.
bp has a long history at Kirkuk, supporting NOC and the Iraq government on technical studies between 2013 and 2019 to explore the potential for redevelopment. It was also a member of the consortium of firms that discovered oil at Kirkuk in the 1920s.
