UK-based international oil and gas giant BP announced on Tuesday that it reached agreement on all contractual terms with the Government of Iraq to invest in several giant oil fields in Kirkuk.

The agreement includes the rehabilitation and redevelopment of the oilfileds, spanning oil, gas, power, and water infrastructure, with additional potential for investment in exploration.

The agreement is subject to final governmental ratification.

BP said it will work closely under Iraqi government in setting up the new operator, which will be an unincorporated organisation comprising personnel from the North Oil Company (NOC) and North Gas Company (NGC) with secondees from BP.

The new operator will take over from NOC, the statement said, adding that subsequent to this agreement, BP expects to form a standalone incorporated joint venture (JV) to hold its interests in the operator.

BP expects the project to commence in 2025.

The fresh agreement follows a memorandum of understanding between BP and Iraq signed in July 2024 – of which technical terms were agreed in December and the majority of commercial terms agreed in January – together with previous work BP has done on the fields in Kirkuk from 2013 to 2019.

The agreement is for an initial phase and includes oil and gas production of more than 3 billion barrels of oil equivalent. It includes the Baba and Avanah domes of the Kirkuk oil field and three adjacent fields – Bai Hassan, Jambur and Khabbaz – in Federal Iraq, all of which are currently operated by the NOC.

The wider resource opportunity across the contract and surrounding area is believed to include up to 20 billion barrels of oil equivalent.

BP's executive vice president William Lin said the agreement delivers access to a material new resource opportunity, within one of the world’s most prolific hydrocarbon provinces. 

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

A seperate statement by the Iraqi Prime Minister's office said the project also includes the construction of a 400 megawatt (MW) power plant to support its objectives. 

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.

(Writing by Majda Muhsen; Editing by Anoop Menon)

(anoop.menon@lseg.com) 

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