BP will join forces with the Iraqi government to upgrade and develop four oil and gas fields in the northern Kirkuk region.
This week, BP and the Iraqi government signed a preliminary agreement to initiate this project. This new agreement follows a previous one made in 2013 for the development of the large Kirkuk field, which is estimated to contain around nine billion barrels of recoverable crude oil. However, the 2013 deal was halted a year later due to the rise of the Islamic State (IS) in the Middle East.
After the conflict with IS, the Kurdish region claimed ownership of the Kirkuk field, complicating BP’s agreement with the central Iraqi government.
In a statement about the new deal, BP outlined plans for rehabilitating existing facilities and constructing new ones, including gas expansion projects. They also plan to implement a drilling program at the Kirkuk fields. These efforts aim to stabilize production, reverse the decline, and put the field back on a growth trajectory.
Iraq, the second-largest oil producer in OPEC, saw its oil industry’s beginnings in Kirkuk. However, in recent years, oil operations there have faced challenges due to disputes between Baghdad and the Kurdish regional government over control and revenue. These disputes were resolved, only to be followed by a new crisis involving the pipeline transporting Kirkuk oil to Turkey.
This latest issue arose after a March 2023 ruling by the International Chamber of Commerce (ICC), which sided with Iraq in a dispute with Turkey regarding Kurdish oil. The ICC ruled that Turkey should not permit Kurdish oil exports through the Iraq-Turkey pipeline and the Turkish port of Ceyhan without approval from the Iraqi federal government.
As a result, oil shipments from Kurdistan to Turkey have been suspended for over a year. Currently, the remaining oil from the region is being sent to local refineries. Recent reports from Reuters indicate that smuggling has increased in northern Iraq, with oil being transported by truck into Turkey and Iran.