British Oil & Gas giant BP Plc (NYSE:BP) will develop Iraq's Kirkuk oil and gas fields based on a profit-sharing model, Iraqi oil ministry officials have revealed. The oil ministry and BP are expected to sign a confidentiality agreement in the current week, after which Iraq will hand over the data package for Kirkuk's four fields and installations. According to the officials, Kirkuk oil fields are currently producing 245,000 barrels of crude per day. Iraq is OPEC's second-largest producer after Saudi Arabia. Iraq's economy relies heavily on crude oil exports, with crude accounting for more than 90 percent of the country's revenues.
Back in May, French oil and gas multinational TotalEnergies (NYSE:TTE) reached an agreement with the government of Iraq to start a long-delayed $27 billion energy project. Total first signed a deal with the Iraqi government in 2021 that would see Total build four oil, gas, and renewables projects in southern Iraq over 25 years with an initial investment of $10 billion. Unfortunately, the giant project was shelved amid disputes and squabbling between Iraqi politicians over terms of the deal. However, Iraq finally agreed to a smaller 30% stake in the project, setting in motion a deal that could lure foreign investment back into the country. After years of instability, Iraq has been enjoying a period of relative stability, increasing the chances of foreign investors returning to the country.
"The government of Iraq confirmed the whole contract, no modification at all ... so that was for me more than good news," Total Chief Executive Patrick Pouyanne has told Reuters.
Meanwhile, Iraq could also soon resume oil exports via a pipeline to the Turkish port of Ceyhan on the Mediterranean coast. Export flows to Türkiye's Ceyhan port are yet to restart after Ankara halted Iraq's 450,000 barrels per day (bpd) of exports through the Iraq-Türkiye pipeline on March 25 following an ICC ruling that Türkiye should pay Baghdad damages of $1.5 billion for unauthorized exports by the KRG. However, the Iraqi oil ministry, Kurdistan's Ministry of Natural Resources and international oil companies met in June in Baghdad to discuss resuming production and exports.
"We have made progress in today's talks, and we expect to reach an understanding in a few days," said Iraq's oil minister, Hayan Abdul Ghani.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More