bp looks set to return to the Kirkuk region of Iraq, five years after pulling out at the end of an earlier contract. In August, it said that it had signed a memorandum of understanding (MoU) with Iraq to negotiate an energy redevelopment programme for Kirkuk, covering power generation and new solar facilities, as well as oil and gas.
The MoU, which is due to be finalised in 2025, covers some of the main fields feeding Iraq’s Kirkuk crude blend, including two of the Kirkuk field’s domes — Baba and Avanah — and three satellite fields, all of which are operated by Iraq’s North Oil Company (NOC). Kirkuk, whose fields straddle the border with Kurdistan, has also traditionally been fed by fields controlled by the Kurdistan Regional Government (KRG), although flows from these have been patchy in recent years due to ongoing political disputes between the two sides and to damage and more recently closure by Turkey of the Iraq-Turkey export pipeline to Ceyhan.
The proposed redevelopment will include rehabilitation of existing facilities and construction of new ones, including gas expansion projects, in addition to a new drilling programme at the Kirkuk fields.
Iraq is hoping the new work will stabilize production from the fields, which peaked at over 1.2 million barrels per day in the 1980s but which had slumped after reservoir damage, followed by decades of war and political instability to only 360,000 b/d in July 2024. The Kirkuk field is estimated to hold reserves of around 9 billion barrels of recoverable oil.
The MoU represents a return to Kirkuk for bp, which conducted a series of technical and seismic studies on the fields from 2017-19, but which withdrew from the region when its service contract expired. That contract, signed in 2013, was delayed when the KRG seized some of the Kirkuk fields and resumed only when Baghdad regained control in 2017.
According to Reuters, the new MoU is believed to involve a conventional profit-sharing model for the fields, a move away from the fixed unit price service contracts introduced in the early 2010s that have also been blamed for waning interest in Iraq among the oil majors.
But bp’s history in Iraq and Kirkuk goes back even further still. Its predecessor Anglo Persian was a major shareholder in the company that struck first oil in Iraq in Baba Gurgur — the Father of Fire — in October 1927, and the company remained a major operator in Iraq until the oil sector was nationalised in 1970. It returned only in 2009, with a 25-year technical service contract to increase production at the country’s flagship southern oilfield, Rumaila.