bp, Iraq to begin initial stages of Kirkuk redevelopment with formalized contract

bp plc has received final government ratification for its contract to invest in the redevelopment of several giant oil fields in Kirkuk, in the north of Iraq.

The contract among North Oil Co. (NOC), North Gas Co. (NGC), and bp includes the rehabilitation and redevelopment of the fields, spanning oil, gas, power, and water with potential for investment in exploration, bp said in a release Mar. 26.

As part of the agreement, bp’s remuneration will be linked to incremental production volumes, price, and costs. bp will be able to book a share of production and reserves proportionate to the fees it earns for helping to increase production, the company said.

The contract comes a year after signing a memorandum of understanding. 

With the approval, bp will now work under the guidance of the Iraqi government to set up a new operator to begin initial stage development operations. The new operator will be set up as an unincorporated organization made up mostly of personnel from NOC and NGC, but also with secondees from bp, the company said.  

The agreement is for an initial phase that includes oil and gas production of more than 3 billion boe and includes the Baba and Avanah domes of Kirkuk oil field and three adjacent fields in Federal Iraq (Bai Hassan, Jambur, and Khabbaz), all of which are currently operated by the NOC. 

bp said the wider resource opportunity across the contract and surrounding area is believed to include up to 20 billion boe.