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Iraq Ready To Sign Deal With BP For Kirkuk Fields

Kirkuk oil field

Iraq will today sign an agreement with BP for the development of oil fields around Kirkuk, according to an unnamed Iraqi official who spoke to Reuters. The government first approached the supermajor last October, after its army retook control of Kirkuk from Kurdistan after an ill-fated independence referendum.

BP was present in northern Iraq until 2015, providing technical assistance in the development of the huge Kirkuk field, but after that, the Kurdish minority took over the field and adjacent deposits.

Though control of the city of Kirkuk has been disputed over the last few years, as it doesn’t lie within the boundaries of the Kurdistan autonomous region, control over the fields was effectively in Kurdish hands to the chagrin of Baghdad. After the referendum from last September, the Iraqi government saw a chance to regain control of its northern oil wealth, so it took it.

In mid-October, the energy ministry urged BP to return to the northern Iraqi fields as quickly as possible to help it boost production from the Kirkuk fields to over 1 million barrels daily, despite its quota under the OPEC production cut deal.

Northern Iraq’s fields are among the biggest and most productive, with BP itself estimating the remaining crude oil reserves in the region at 9 billion barrels.

Related: Are Hedge Funds Pushing Oil Prices Too High?

The news about BP comes on the heels of an announcement by Shell that it has made a final decision to exit Iraq and news from Chevron that it will be returning to Iraq—and in Kurdistan, at that.

The first announcement raised eyebrows as it coincided with another one, about Shell planning to expand production at the North Sea Penguins field. The second one, from Chevron, suggests that the tension between the Kurdistan Regional Government and Baghdad is subsiding and oil business in the area could eventually return to normal.

By Irina Slav for Oilprice.com

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  • Mamdouh G Salameh on January 18 2018 said:
    I am not at all surprised that Iraq is signing an agreement with BP for the development of oil fields around Kirkuk with estimated remaining reserves of 9 billion barrels (bb).

    BP along with the China’s CNPC are already developing Iraq’s biggest oilfield, Rumaila in the south with proven oil reserves of 17.8 bb.

    Iraq is one country to watch in 2018. Having defeated ISIS militarily, Iraq is now focusing on raising its oil production to more than 5 million barrels a day (mbd) in 2018 from 4.4 mbd in 2017 and a projected 6-7 mbd by 2020 taking advantage of its huge proven reserves and the lowest cost of production in the world.

    Iraq will soon be demanding a new production quota from OPEC, far above its current 3.2 mbd.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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