Iraq and BP agree on four Kirkuk oil fields
Iraq and oil giant BP signed a contract to redevelop Kirkuk's four oil and gas fields. BP announced the deal on Tuesday. This is a major breakthrough for Iraq where production has been hampered by war, corruption, and sectarian tensions.
The signing takes place a day before BP updates investors on its strategic plan. It is widely expected that BP will reduce investments in renewable energies and return to investing more in oil and natural gas.
A senior Iraqi oil official said in early February that BP expects to spend as much as $25 billion on the project over its lifetime.
BP stated that under the terms of the contract, which is still subject to the final ratification from the Iraqi government, BP would work with North Oil Co. (NOC), North Gas Co.
The work will include a drilling program, rehabilitation of wells and existing facilities, as well as the construction of new pipelines, including projects for gas expansion, according to the statement.
BP has said that its remuneration is linked to production volumes and prices, and it will also be able book a proportion of production and reserves in relation to the fees earned for helping increase production.
According to a senior Iraqi official, BP will increase crude production from the four Kirkuk oilfields by at least 150,000 barrels per daily (bpd), bringing total capacity up to 450,000 bpd within 2-3 years.
The Iraqi Prime Minister's Office said that the signing took place after both parties had agreed to "technical terms and contractual conditions, including the economic model for the project."
The BP agreement focuses on rehabilitating four oilfields, and developing natural gases to support Iraq's energy needs.
BP was a part of the oil consortium that discovered oil at Kirkuk during the 1920s. BP estimates that the Kirkuk oil field contains about 9 billion barrels worth of recoverable crude.
The company has a 50% share in a joint-venture that operates the Rumaila oilfield, located in the southern part of the country. It has been there for over a century.
(source: Reuters)
