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British Oil & Gas giant BP Plc (NYSE:BP) has received final approval by the Iraqi government for the redevelopment of the giant Kirkuk oil fields, with an initial plan to produce 3B boe. BP will develop Iraq’s Kirkuk oil and gas fields based on a profit-sharing model, Iraqi oil ministry officials have revealed. BP will spend as much as $25B in a deal that will last more than 25 years. Previously, Iraq’s oil ministry and BP signed a confidentiality agreement, after which Iraq handed over the data package for Kirkuk’s four fields and installations. According to the officials, Kirkuk oil fields are currently producing 245,000 barrels of crude per day. Iraq is OPEC’s second largest producer after Saudi Arabia. Iraq’s economy relies heavily on crude oil exports, with crude accounting for more than 90 percent of the country’s revenues.
The Kirkuk deal is a breakthrough for Iraq, where oil production has been curtailed by years of war. Lately, Iraq has been pushing to re-open abandoned energy projects. Last year, French oil and gas multinational TotalEnergies (NYSE:TTE) reached an agreement with the government of Iraq to start a long-delayed $27 billion energy project. Total first signed a deal with the Iraqi government in 2021 that would see Total build four oil, gas, and renewables projects in southern Iraq over 25 years with an initial investment of $10 billion. Unfortunately, the giant project was shelved amid disputes and squabbling between Iraqi politicians over terms of the deal. However, Iraq finally agreed to a smaller 30% stake in the project, setting in motion a deal that could lure foreign investment back into the country. After years of instability, Iraq has been enjoying a period of relative stability, increasing the chances of foreign investors returning to the country.
“The government of Iraq confirmed the whole contract, no modification at all … so that was for me more than good news,” Total Chief Executive Patrick Pouyanne has told Reuters.
