Shafaq News/ Iraq will share profitswith BP (BP.L), from developing its giant Kirkuk oil and gas fields, twoofficials said on Tuesday, as the country moves away from low-margin servicecontracts to speed up production growth and lure back Western majors.
Several oil majors, including BP, inrecent years turned to other countries offering better terms. They complainedthe traditional oil service contracts in Iraq that paid a flat rate for everybarrel of oil produced after reimbursing costs, prevented them benefiting fromrising oil prices.
Iraq and BP, which is returningafter a nearly five-year absence, signed a preliminary agreement earlier thismonth to develop four oil and gas fields in northern Iraq's Kirkuk. BP hasestimated the Kirkuk field holds about 9 billion barrels of recoverable oil.
The two oil ministry officials toldReuters the contracts with BP to develop the Kirkuk, Bai Hasan, Jambour andKhabbaz fields would be on a profit-sharing model.
BP declined to comment beyond itsAug. 1 statement on the preliminary deal.
Speaking on condition of anonymitybecause they were not authorised to speak to the press, the officials said theoil ministry and BP were expected to sign a confidentiality agreement thisweek, after which Iraq will hand over the data package for Kirkuk's four fieldsand installations.
A final agreement is expected by theend of this year, the officials added. BP had said it expected negotiationsover the preliminary agreement to be complete early in 2025.
BP and the Iraqi oil ministry signedin 2013 a letter of intent to study developing Kirkuk.
That deal was put on hold in 2014when the Iraqi military collapsed in the face of Islamic State's advance innorthern and western Iraq, allowing the Kurdish Regional Government (KRG) totake control of the Kirkuk region.
Baghdad regained full control of thedeposit from the KRG in 2017 after a failed Kurdish independence referendum, atwhich point BP resumed its studies on the field.
But in late 2019, BP pulled out ofthe oilfield after its 2013 service contract expired with no agreement on thefield's expansion.
Iraq, the second biggest producer inthe Organization of the Petroleum Exporting Countries behind the group's defacto leader Saudi Arabia, has the capacity to produce almost 5 million barrelsper day.
Kirkuk was discovered in 1927 andmarks the birthplace of Iraq's oil industry. Its fields produce about 245,000barrels per day, the officials said.
BP said earlier this month thatrehabilitating existing facilities, building new ones, where needed, and othermeasures could stabilise production and reverse decline at Kirkuk.
(Reuters)