Iraq’s oil ministry has confirmed that BP is in talks to develop the Kirkuk oilfield in the north of the country, as officials hope to arrest Kirkuk’s long decline and pump an additional 300,000 barrels of oil per day (bpd) from the field.
The field neglected and has not received remedial attention since the 2003 invasion beyond ersatz repairs by North Oil Company workers.
The 100km by 12km Kirkuk field was discovered in 1927 and at one point under the rule of Saddam Hussein produced 1.5 million bpd, albeit through ham-fisted injection methods which temporarily pushed production to 1.5 million bpd may have permanently damaged the field. Today the field produces only around 280,000 bpd, and is thought to hold recoverable reserves of 8.7 billion barrels.
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 at over $5 a barrel.
The oil ministry seems happy to make a power play for the development of the field over the heads of Kurdish politicians. The Kurdish Regional Government opposes any deal with foreign oil companies in Kirkuk, while the status of the province is unresolved.
The KRG has raised the stakes in its perennial spat with Baghdad over $1 billion of overdue oil revenue and a mismatch between the oil the region says it exports via Iraqi infrastructure and the amount Baghdad declares it has sold.
There are competing claims on whether Kirkuk is part of the Kurdish region of Iraq or not, complicated by sweeping changes to the region’s demography during and after Saddam Hussein’s Ba’athist regime.
The Iraq constitution sets a framework for a referendum to decide the fate of Kirkuk, but the central government has stalled on the issue, which if mishandle d could give rise to intramural conflict in the country.
Kurdish news service AK News had reported that a deal between the oil ministry and BP has already been signed, citing North Oil Company official Hussein Allam. According to Allam, an ‘initial agreement’ has been signed.
“The initial agreement is part of a high-level plan carried out by the Oil Ministry through the Northern Oil Company to develop the production of the northern fields through a partnership contract signed with BP,” Allam, who has also described BP as the “most competent” firm to develop Kirkuk, told AK News. News of the signing has later been denied by officials, reports Iraqi journalist Kassakhoon.
However, newswire service UPI describes BP as the “top contender” for a development contract.
The terms of a development contract have not been disclosed, and the oil ministry is likely to receive political flak for failing to award the contract in a transparent forum.
Baker Hughes and Schlumberger are also reported to be interested in developing the field.
BP was not available for comment.
