BP Plc (NYSE: BP), the British oil and gas giant, has secured final approval from the Iraqi government for the redevelopment of the massive Kirkuk oil fields. The project is set to initially produce 3 billion barrels of oil equivalent (boe). BP will operate the fields based on a profit-sharing agreement with the Iraqi government, officials from the country’s oil ministry confirmed.
BP’s investment in the redevelopment could reach up to $25 billion, and the deal is expected to last for over 25 years. The partnership follows a confidentiality agreement signed between Iraq’s oil ministry and BP. After this, Iraq provided BP with a comprehensive data package covering the Kirkuk fields and their related installations.
Currently, the Kirkuk oil fields produce about 245,000 barrels of crude oil daily. Iraq is OPEC‘s second-largest oil producer, following Saudi Arabia, and the country’s economy heavily depends on crude oil exports, which make up more than 90% of its revenue.
The Kirkuk deal marks a significant step for Iraq, which has faced years of conflict and instability that have hindered its oil production. Recently, the government has been working to revive neglected energy projects. Last year, French multinational TotalEnergies (NYSE: TTE) reached an agreement with Iraq to move forward on a $27 billion energy project that had been delayed for years. Total first signed the deal with Iraq in 2021, aiming to develop four oil, gas, and renewable energy projects in southern Iraq over a 25-year period, with an initial $10 billion investment. However, political disagreements in Iraq led to delays and the shelving of the project.
Now, a revised agreement has been reached, with Iraq agreeing to a 30% stake in the venture, which could help attract foreign investments back to the country. With Iraq enjoying a period of relative stability, the prospects for foreign investment have improved.
Total CEO Patrick Pouyanne expressed satisfaction with the deal, telling Reuters, “The government of Iraq confirmed the whole contract, no modification at all … so that was more than good news.”
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