Iraq and British oil giant BP are poised to finalize a monumental agreement in early February to redevelop four oil and gas fields in the northern city of Kirkuk, Iraqi Oil Minister Hayan Abdel-Ghani announced Wednesday. The deal is expected to exceed the size and scope of a $27 billion agreement Iraq struck with TotalEnergies in Basra last year.
The agreement includes plans to raise oil production in the Kirkuk fields by up to 150,000 barrels per day, with the additional oil being channeled to northern refineries currently operating below capacity. The deal also incorporates a significant gas component aimed at capturing and utilizing gas, a move to reduce environmental damage caused by flaring.
Iraq aims to end the environmentally harmful practice of gas flaring—burning excess gas during oil production—by 2028. The agreement with BP is expected to play a crucial role in achieving this target, enhancing Iraq’s gas production capabilities while addressing climate concerns.
Iraq's state news agency reported that Baghdad and BP had signed a preliminary agreement to evaluate the redevelopment of the Kirkuk oil and gas field and nearby fields. While details of the preliminary agreement remain limited, the deal builds on technical terms established in December between the two parties.
BP has a long history in Iraq, being part of the consortium that discovered oil in Kirkuk in the 1920s. The region is estimated to hold about 9 billion barrels of recoverable oil. BP currently holds a 50% stake in a joint venture operating the Rumaila oilfield in southern Iraq, a partnership that dates back nearly a century.
Unlike past contracts that offered slim profit margins for foreign companies, the new agreement with BP is expected to feature a more generous profit-sharing model. This shift reflects Iraq's intent to attract international investment while ensuring mutual benefits.
As OPEC’s second-largest oil producer, Iraq has the capacity to produce nearly 5 million barrels per day.
