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BP Signs Pact to Help Revive Iraq's Kirkuk Oil Field

BP Signs Pact to Help Revive Iraqs Kirkuk Oil Field
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Τετ, 11 Σεπτεμβρίου 2013 - 19:41
BP PLC (BP) has agreed to help the Iraqi government revamp its giant Kirkuk oil field, Iraq's oil minister said Wednesday, potentially paving the way for the U.K.-based company to clinch a longer-term development deal.
BP PLC (BP) has agreed to help the Iraqi government revamp its giant Kirkuk oil field, Iraq 's oil minister said Wednesday, potentially paving the way for the U.K.-based company to clinch a longer-term development deal.

"[BP] have already signed a letter of intent, but work hasn't started yet," Abdul Kareem Luaiby said on the sidelines of a meeting of energy ministers in Seoul .

For BP, the agreement could be a first step toward clinching a longer-term development contract like the technical service contract it has for the Rumaila field, Iraq 's largest. Securing such a deal on a field with more than 10 billion barrels of untapped crude still underground would provide BP with valuable cash flow.

Under the 20-year technical service contract at Rumaila, BP and China National Petroleum Corp. aim to increase plateau production to 2.85 million barrels a day by the end of 2017. BP signed the Rumaila technical service contract in 2009 after initially supporting operations there for three years.

Ali Nazar, a senior official at state-run Iraqi oil marketing company SOMO, said BP has a preliminary project at Kirkuk that includes studying gas injection and water treatment.

"They are studying these things first, and they will start [developing] later," Mr. Nazar said, adding that there is no timetable yet for BP's increased involvement.

A BP spokesman said the company is pleased with the agreement.

Kirkuk , located in a disputed part of northern Iraq , was discovered in 1927. Production there has declined to 260,000 barrels a day from 900,000 barrels a day in the early 2000s after years of injecting water and the dumping of unwanted crude and other oil products in the field's reservoir.

The award of the contract to redevelop the large Kirkuk field, in northern Iraq , has been delayed in part because it lies in an area whose control is disputed between Baghdad and the government of the semi-autonomous Kurdish region.

The Kurdistan Regional Government has opposed a deal with BP to develop Kirkuk . It said on its website a few months ago that the proposed agreement between Baghdad and BP would be illegal and unconstitutional as long as the dispute over sovereignty of the province continued.

KRG officials weren't immediately available to comment.

Also Wednesday, Mr. Luaiby said that Iraq 's West Qurna 2 oil field, which is being developed by Russia 's OAO Lukoil Holdings (LKOH.RS), is expected to begin production in March 2014. Lukoil has sent a letter to Iraqi Prime Minister Nouri al-Maliki last month in which it showed interest in reviving Kirkuk oil field.

London-based BP is one of several international oil companies already redeveloping other old oil fields in Iraq . Baghdad has signed a series of contracts with international oil majors to boost Iraq 's output to 12 million barrels a day by 2017, enough to make it the largest-producing country in the world.

BP is already working in southern Iraq . It is redeveloping the 1.35 million-barrel-a-day Rumaila oil field, Iraq 's largest.

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