Economic Update – Baghdad
According to a senior official from the Iraqi oil sector, BP Exploration Company is expected to invest approximately $25 billion in the redevelopment of four oil fields in Kirkuk. This initiative comes as Baghdad aims to attract foreign investment back into its oil industry.
If the anticipated agreement is finalized in the coming weeks, it will represent a significant milestone for Iraq, which has faced production constraints for years due to ongoing conflict.
As the second-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), following Saudi Arabia, Iraq currently produces over 4 million barrels of oil per day.
The investment by BP is expected to fall between $20 billion and $25 billion, structured under a profit-sharing agreement that is slated to extend for over 25 years.
While BP has not commented directly on these developments, it did acknowledge recent progress in negotiations with the Iraqi government regarding a joint redevelopment project for several Kirkuk oil fields.
This potential agreement with BP marks the second major pact between Iraq and an international oil company in just two years, following a $27 billion agreement with TotalEnergies in Basra.
The focus of the BP agreement will include refurbishing infrastructure at the specified oil fields, alongside initiatives aimed at enhancing natural gas development to support Iraq’s local energy requirements.
The official noted that technical and economic discussions are progressing, with the expectation that final contracts could be signed within the first half of February, potentially as early as the end of this week.
Upon successful implementation, the agreement could enable BP to boost the production capacity of the four Kirkuk oil fields by an additional 150,000 barrels per day, increasing total production capacity to a minimum of 450,000 barrels per day over the next two to three years.
Current production levels are reported at approximately 300,000 barrels per day, according to officials from the National Oil Company.
The profit-sharing model under discussion is designed to facilitate BP’s cost recovery while allowing for profit realization as production rates improve from existing levels.
It is important to highlight BP’s extensive experience in the Kirkuk region, where it already holds a 50% stake in a joint venture responsible for operating the significant Rumaila oil field in southern Iraq.
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