British oil and gas company BP has signed an initial agreement with Iraq to negotiate the development of Kirkuk oil and gas fields.
Negotiations are expected to be completed early next year, the London-headquartered company said on Thursday.
The non-binding agreement included oil and gas investment, power generation, introduction of solar energy facilities and further exploration activities, it added.
The pact was signed in Baghdad in a meeting between Iraqi Prime Minister Mohammed Al Sudani and BP chief executive Murray Auchincloss on Thursday.
It will cover the Baba and Avanah domes and three adjacent fields - Bai Hassan, Jambur and Khabbaz - in Iraq, that are operated by government-owned North Oil Company.
Iraq’s Kirkuk oilfield is one of the largest and oldest oilfields in the world, and its Baba and Avanah domes are known for large reserves of crude oil. These domes are the upper portions of large underground reservoirs where oil and gas have accumulated over millions of years due to the geological formations.
“We see today’s signing as an important step towards the potential further development of this critically important area. It aligns with BP’s six clear priorities and is in support of our drive to deliver as a simpler, more focused, higher value company,” Mr Auchincloss said.
BP was a member of the consortium of oil companies that discovered oil in Kirkuk in the 1920s.
From 2013 to 2019, it worked with the Ministry of Oil and North Oil Company on technical studies exploring the potential for redevelopment at Kirkuk.
Iraq is working to address its power shortages and upgrade its energy infrastructure.
Despite being the second-biggest producer in Opec bloc, Iraq is dependent on Iran for about a third of its electricity needs. It buys electricity and natural gas to generate power from its neighbour but still has electricity shortfalls that result in extended power cuts across the country.
The rehabilitation of existing facilities and the construction of new ones, including gas expansion projects and a drilling programme at the Kirkuk fields, could stabilise production and reverse its decline, putting this vital oilfield back on a growth trajectory, BP said.
It could bring investment and opportunities to the Kirkuk region, spurring future growth in downstream industries. It could also add tangible benefits for the local population, including job creation and increased demand for local suppliers.
