On February 25, BP reached an agreement with the Iraqi government on investment in four giant oilfields in the Kirkuk region, including the repair and redevelopment of existing production facilities and supporting infrastructure in the oilfields, with a total investment of $25 billion. The agreement still needs final approval from the Iraqi government.
According to the agreement process, BP will participate in the establishment of a new operating entity under the coordination of the Iraqi government. The entity will be mainly composed of personnel from Iraq's North Oil Company (NOC) and North Gas Company (NGC), integrate BP's dispatched expert team, and take over the operation of Kirkuk oilfield. BP intends to hold its interests in the new operating entity by establishing an independent joint venture.
This agreement is a substantial advancement of the memorandum of understanding signed by the two parties in July 2024. Among them, the technical terms were completed in December last year, and the core commercial terms were basically reached in January this year.
The development scope covers Baba and Avanah domes, Bai Hassan, Jambur and Khabbaz fields.
The initial development target of the project is expected to exceed 3 billion barrels of oil equivalent. It is believed that the resource potential reserves of the entire contract area and the radiation area are as high as 20 billion barrels of oil equivalent.
According to a senior Iraqi official, the contract period is more than 25 years, and bp will invest about US$20-25 billion in the entire project period, focusing on the reconstruction and upgrading of the above four oil and gas fields.
He said that according to the agreement, bp will increase the daily crude oil production capacity of the four major oil fields by 150,000 barrels within 2 to 3 years, bringing the total production capacity to at least 450,000 barrels/day.
William Lin, executive vice president of bp, said: "As one of the richest oil and gas resources in the world, Kirkuk needs large-scale development experience. We will work closely with NOC and NGC to give full play to bp's technical advantages in super-large oil field management and maximize the value of assets."
The agreement stipulates that bp will jointly implement a capacity expansion plan with NOC and NGC, including carrying out systematic drilling operations, repairing existing production facilities, and building new supporting infrastructure such as natural gas processing.
It is worth noting that bp's investment return mechanism will adopt a dynamic adjustment model, which is directly linked to the scale of production increase, oil price fluctuations and cost expenditures. According to the agreement, bp will obtain corresponding production and reserve rights in proportion to its production increase service income.
The project is expected to bring significant economic benefits to the Kirkuk region, including creating jobs, improving supply chain capabilities and improving the living standards of local residents.
bp emphasized that the investment plan strictly follows the company's financial management framework and meets the investment return requirements. The project will be officially launched this year.
