The Iraqi Oil Ministry says is pouring over several offers from international oil companies for the rehabilitation of Kirkuk’s oil field, as the government presses on with its ambitious oil production programme.
“We are now in the process of studying offers from several international oil companies, like BP and Schlumberger, to develop the Kirkuk oil field,” Abdul Kareem al-Luaibi told Platts.
The 100km by 12 km Kirkuk field was discovered in 1927 and at one point under the rule of Saddam Hussein produced 1.5 million barrels of oil per day (bpd), albeit through ham-fisted injection methods which may have permanently damaged the field. Today the field produces only around 280,000 bpd.
With an estimated 10 billion barrels of recoverable reserves, Kirkuk is one of the most potentially lucrative fields in Iraq, but facilities at the site have suffered from theft, sabotage and years of decline. Huge quantities of gas are flared at the field.
The Iraqi Oil Ministry is thought to be pleased with progress at the Rumaila field, which BP jointly operates with China’s CNPC, and would like to see BP repeat the trick in the North. The current terms offered by BP are not known, and BP is said to be non-committal on the prospect.
A toxic mix of oil and political tension has so far kept oil firms away from the field, with a tendering process by the North Oil Company to major oil services firms failing to come to anything. The field was included in the first auction of field development contracts in 2009, but Baghdad’s insistence on $2 fee-per-barrel terms drove away Shell, the sole bidder.
Moreover, offering a field development contract in a contested territory without a public auction may give rise to further political headaches for Baghdad.
Kirkuk has uncertain status within the country, with claims that it is both part of the semi-autonomous Kurdish region and that it should remain part of unfederated Iraq. A referendum to settle the issue mandated by the Iraqi constitution has been put off indefinitely for fear of setting off severe civil unrest or even intramural conflict.
The news comes after Hussain Al-Sharistani, Depity Prime Minister for Energy, announced on Monday that Iraq is now producing 3 million barrels of oil per day, and that loading increased export volumes to Basra’s new offshore oil terminal is about to begin.
