BP has reached a final agreement with the Iraqi government to advance the redevelopment of key oil fields in Kirkuk, northern Iraq.
The agreement, which encompasses oil, gas, power, and water infrastructure, also includes provisions for potential investment in exploration. The deal remains subject to ratification by the Iraqi Council of Ministers before it is implemented.
Once approved, BP will work with the Iraqi government to establish a new operating entity that will assume control of operations from the North Oil Company (NOC).
The entity will be an unincorporated organisation consisting primarily of personnel from NOC and North Gas Company (NGC), with additional secondees from BP. Following this phase, BP intends to form a standalone incorporated joint venture to hold its stake in the operation.
The agreement follows a memorandum of understanding signed between BP and Iraq in July 2024. Technical terms were finalised in December, and the majority of commercial terms were concluded last month.
The deal builds on BP’s earlier involvement in Kirkuk, where it conducted technical studies from 2013 to 2019.
The contract’s initial phase covers the Baba and Avanah domes of the Kirkuk oil field, as well as three adjacent fields: Bai Hassan, Jambur and Khabbaz. These fields, which are located in Iraq, are currently operated by NOC.
Collectively, they hold an estimated three billion barrels of oil equivalent in recoverable reserves. The broader resource potential within the contract area and surrounding region is estimated to reach up to 20 billion barrels of oil equivalent.
Under the agreement, BP will collaborate with NOC, NGC and the newly established operator to stabilise and increase production levels. The work scope includes new drilling activities, rehabilitation of existing wells and infrastructure development, including gas expansion projects.
BP executive vice president William Lin said: “This agreement builds on our longstanding and strategic relationship with the Government of Iraq and delivers access to a material new resource opportunity, within one of the world’s most prolific hydrocarbon provinces.
“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.”
BP’s compensation will be linked to incremental production volumes, market prices and operational costs. The company will have the ability to book a share of production and reserves proportional to the fees it earns for production enhancement.
The investment is expected to contribute to economic activity in Kirkuk by strengthening local supply chains and generating employment. BP has stated that the project aligns with its financial framework and investment return criteria. Operations under the agreement are expected to commence in 2025.
BP was part of the original consortium that discovered oil in Kirkuk in the 1920s. The company previously collaborated with Iraq’s Ministry of Oil and NOC between 2013 and 2019 to assess the potential for large-scale redevelopment in the region.
Earlier this month, BP began production from the second development phase of the Raven field, located offshore Egypt, as part of the West Nile Delta (WND) project.
