In an effort to accelerate production growth and entice back Western majors, Iraq is moving away from low-margin service contracts, and two officials announced on Tuesday that the country will share profits with BP from developing its massive Kirkuk oil and gas fields.
In recent years, a number of oil majors, including BP, have looked to other nations that are offering better terms. They complained that they were not able to profit from rising oil prices because traditional oil service contracts in Iraq paid a flat rate for each barrel of oil produced after costs were reimbursed.
Iraq and BP, which is returning to the country after almost five years away, earlier this month signed a preliminary agreement to develop four oil and gas fields in Kirkuk, in northern Iraq. According to BP, the Kirkuk field has roughly 9 billion barrels of recoverable oil.
The two oil ministry officials told Reuters that the contracts with BP to develop the Kirkuk, Bai Hasan, Jambour, and Khabbaz fields would be on a profit-sharing basis.
The officials, who spoke under anonymity since they were not authorised to address the media, stated that Iraq will turn over the data package for Kirkuk’s four fields and installations this week following the signing of a confidentiality agreement by the oil ministry and BP.
The officials stated that a final agreement is anticipated by the end of this year. BP had previously stated that it anticipated the preliminary agreement negotiations to be finished by early 2025.
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