BP signs contract to develop Iraq oil fields

08 May 2018
Contract to develop Kirkuk oil fields expands Big Oil major’s scope of work in the country

Iraq’s state-run North Oil Company signed an agreement with international oil company BP to triple output from oil fields in Kirkuk in the north of the country, Oil Minister Jabar al-Luiebi said.

The agreement was signed in the southern Iraqi city of Basra, he told a news conference after the signing on 7 May.

Under the deal, BP will boost output capacity from six fields in the Kirkuk governorate to a total of more than 1 million barrels a day (b/d), three times the region’s current output capacity.

Baghdad retook control of the oil fields in October last year, after Iraqi government forces drove away Kurdish fighters from the area. The Oil Minister began talks with BP in October, days after the Kurdish fighters were expelled.

Oil exports from the region, transported by pipeline to Turkey, were halted after the Iraqi military operation, which was launched in retaliation against an independence referendum held on 25 September by the semi-autonomous Kurdistan Regional Government (KRG).

Iraq plans to start exporting crude from Kirkuk to Iran, but Baghdad is yet to wrestle back control of the road to the border from Islamic State militants.

BP had agreed in 2013 to help Baghdad halt a sharp decline in output from Kirkuk. The KRG then took control of the Kirkuk region in 2014, when the Iraqi army collapsed in the face of Islamic State’s sweeping advance in northern and western Iraq.

The Kurdish move prevented the fields from falling into the hands of the militants.

Kirkuk is one of the biggest and oldest oilfields in the Middle East, estimated to contain about 9 billion barrels of recoverable oil, according to BP.

BP has provided technical assistance in the past to the North Oil Company to help execute redevelopment work in the Kirkuk fields.

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