BP agreed contractual terms with the Iraqi government for a broad redevelopment program covering the Kirkuk oil field and three neighboring fields in northeastern Iraq. The arrangement is intended to rehabilitate aging assets, add infrastructure and increase oil and gas output, although it remained subject to approval by Iraq’s Council of Ministers.[3716]
The agreement was finalized on February 25 after negotiations that began with a memorandum of understanding in July 2024. Technical terms were settled in December, while most commercial provisions were resolved in January. BP chief executive Murray Auchincloss discussed the transaction during an investor call on February 26, describing Kirkuk’s large resource base and comparatively low lifting and development costs as a significant opportunity for the company.[3716]
The project encompasses the Baba and Avanah domes at Kirkuk, as well as the Bai Hassan, Jambur and Khabbaz fields. Those assets are operated by Iraq’s North Oil Company. BP said the agreement targets more than 3 billion barrels of oil equivalent in additional oil and gas production from the four-field area. The company estimated that the wider contract area and its surroundings could hold an opportunity of as much as 20 billion barrels of oil equivalent.[3716]
Under the proposed structure, BP and the Iraqi government would establish an unincorporated organization to serve as the new operator. Most of its workforce would come from the state-run North Oil Company and North Gas Company, supplemented by BP personnel. BP would also create a separate incorporated joint venture to hold its interest in the operator, which is expected to assume responsibility for Kirkuk operations from North Oil Company.[3716]
The work program is set to span oil, gas, power and water. BP plans to collaborate with the Iraqi companies and the new operator on drilling, the restoration of existing wells and facilities, and construction of new infrastructure. Gas expansion projects are also included, while the agreement could create opportunities for further exploration.[3716]
BP’s remuneration would vary according to incremental production, prices and costs. The company said it would be able to record a share of production and reserves in proportion to the fees earned by helping raise output. No confirmed investment value was disclosed by BP; although media reports cited an estimate of $25 billion, the company had not verified that figure.[3716]
The deal renews BP’s involvement in an area with which it has longstanding ties. The company was part of the oil-industry consortium that discovered oil at Kirkuk in the 1920s. Between 2013 and 2019, it worked with Iraq’s Ministry of Oil and North Oil Company on technical studies examining redevelopment options for the field.[3716]
The agreement also drew objections from leaders in Iraq’s semiautonomous Kurdistan region, who argued that they should have participated in the negotiations. Its implementation therefore depends not only on the planned operating structure and investment program, but also on the outstanding approval process in Baghdad.[3716]
