BP to invest upto $25 billion in Iraqi Kirkuk oil and Gas
A senior Iraqi official said that BP will spend up to 25 billion dollars over the life of a project redeveloping four Kirkuk oil fields and gas. Baghdad is trying to win foreign investment back.
If the deal is finalized, which could happen in the next few weeks, this would be a major breakthrough for Iraq. The country's production has been severely constrained over the years by war, corruption, and sectarian tensions.
It is the second largest oil producer within the Organization of the Petroleum Exporting Countries.
A senior official who had direct knowledge of the matter said that BP would invest $20 to $25 billion in a profit sharing agreement lasting more than 25 years.
BP didn't immediately respond to a comment request on the deal size, which was not made public before.
The Iraqi official asked for anonymity as he wasn't authorised to publicly speak on the subject.
This would be the second large deal signed between Iraq and a foreign oil company within a few years, following an agreement with TotalEnergies in Basra valued at approximately $27 billion.
IRAQ'S DOMESTIC NEEDS
The BP agreement focuses on rehabilitating four oilfields, and developing natural gases to support Iraq's energy needs.
Officials said that technical and economic discussions were going well, and contracts could be finalized in the first week of February or even this week.
According to the contract, BP will increase crude production from the four oilfields of Kirkuk by at least 150,000 barrels per daily (bpd), to bring the total capacity up to 450,000 bpd within 2-3 years.
According to three officials of the state-owned North Oil Company (NOC), this compares with the current capacity at 300,000 bpd.
The senior oil official stated that under the proposed profit-sharing plan, BP will be able recover its costs and begin making profits as soon as it increases production beyond the current level.
BP is well-versed in the Kirkuk field.
It was part of the group of companies which discovered oil in Kirkuk during the 1920s. The area is estimated to hold about 9 billion barrels worth of recoverable crude oil.
In 2013, the oil major and Iraqi oil minister signed a letter of intention to study developing Kirkuk. However, this deal was put on hold when the Iraqi army collapsed under the weight of Islamic State's advances in northern and Western Iraq. This allowed the Kurdish Regional Government to gain control of the Kirkuk area.
Baghdad took full control of the KRG deposit in 2017, after the failed Kurdish referendum for independence.
BP then returned to the field and resumed their studies, but by late 2019, it had withdrawn from the oilfield when its service contract for 2013 expired without an agreement regarding the expansion of the field.
BP has a 50% share in a joint-venture that operates the Rumaila oilfield, a giant oilfield located in the southern part of the country where the company has operated for a hundred years. (Reporting and editing by Aref Mohammad and Ahmed Rasheed.
(source: Reuters)
