BP, Iraq Finalize Deal on Oil Development in Kurds-Claimed Province

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BP, Iraq Finalize Deal on Oil Development in Kurds-Claimed Province

Baghdad has fully ratified a contract with BP PLC for oil and gas redevelopments and potential exploration in Kirkuk province, the company said. The agreement, laid out last year, provides for re-entry and rehabilitation in several “giant oil fields”, according to the British energy giant. The assets eyed for production are the Kirkuk oilfield’s Avanah […]

Baghdad has fully ratified a contract with BP PLC for oil and gas redevelopments and potential exploration in Kirkuk province, the company said.

The agreement, laid out last year, provides for re-entry and rehabilitation in several “giant oil fields”, according to the British energy giant. The assets eyed for production are the Kirkuk oilfield’s Avanah and Baba domes and three adjacent fields: Bai Hassan, Jambur and Khabbaz.

All of these are operated by state-owned North Oil Co. (NOC). Besides BP and NOC, the tripartite deal also includes the Iraqi state’s North Gas Co. (NGC).

The agreement is for an initial phase with a target production of over 3 billion barrels of oil equivalent (boe). “The wider resource opportunity across the contract and surrounding area is believed to include up to 20 billion barrels of oil equivalent”, BP said in an online statement.

“This is an enormous opportunity as we grow bp’s oil and gas business and fully aligned with our strategy of strengthening our upstream portfolio”, commented chief executive Murray Auchincloss.

BP will now form a new unincorporated company to take over operatorship from NOC. The operator will be composed mostly of personnel from NOC and NGC, with secondees from BP.

“Subsequent to this agreement, bp expects to form a standalone incorporated joint venture to hold its interests in the operator”, BP earlier said February 25.

“Under the terms of the agreement, bp will work with NOC, NGC and the new operator to stabilize and grow production”, it said.

“Work will include a drilling program, the rehabilitation of existing wells and facilities, and the construction of new infrastructure, including gas expansion projects.

“Under the agreement, bp’s remuneration will be linked to incremental production volumes, price and costs. bp will be able to book a share of production and reserves proportionate to the fees it earns for helping to increase production”.

BP executive vice-president William Lin commented, “This agreement builds on our long-standing 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”.

“This opportunity is fully in line with our priority of pursuing new growth opportunities for bp as we strengthen and high-grade our portfolio across the world”, Lin added.

BP had stalled plans for Kirkuk for years citing risks of political instability in the province claimed by Iraq’s autonomous region of Kurdistan.

In 2013 BP signed an agreement with the Iraqi government “on providing technical assistance relating to the Kirkuk oil field”, according to the company’s annual report for that year.

In 2020 Reuters reported citing unnamed sources that BP, which was part of the consortium that discovered Kirkuk in the 1920s, had exited the field after its $100 million exploration contract expired with no agreement for expansion.

The results of field studies conducted by BP “were not encouraging for BP to extend its operations”, an unnamed NOC official told Reuters in the report published January 21, 2020.

Then-chief executive Bob Dudley indicated BP would not return until the political landscape stabilized.

The new agreement comes after the Iraqi government and the Kurdistan regional government reached an agreement on the resumption of oil exports from Kurdistan. The regional government confirmed the export resumption agreement in an online statement February 5, 2025.

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