BP has finalised contractual terms with the Government of Iraq to invest in the redevelopment of several giant oilfields in Kirkuk.

The investment spans oil, gas, power and water sectors, with potential for further exploration.

The execution of the agreement is pending final governmental ratification and will commence following endorsement by the Council of Ministers.

Once approved, bp will work with the Iraqi Government to establish a new operating organisation.

This unincorporated entity will be led by personnel from the state-run companies North Oil Company (NOC) and North Gas Company (NGC), with additional bp secondees.

The new operator will take over operations at Kirkuk from NOC.

BP plans to later form a separate incorporated joint venture to hold its interests in the operator. The project is expected to commence in 2025.

The initial phase of the agreement covers oil and gas production exceeding three billion barrels of oil equivalent (3bboe), including the Baba and Avanah domes of the Kirkuk oilfield and adjacent fields – Bai Hassan, Jambur, and Khabbaz – all currently managed by NOC.

The overall resource potential in the contract area and its vicinity is estimated at up to 20bboe.

The work scope includes drilling, well and facility rehabilitation, and constructing new infrastructure such as gas expansion projects.

BP's compensation will be tied to incremental production volumes, pricing and costs. The company will also be able to record a portion of production and reserves relative to the fees earned from production increases.

BP executive vice-president William Lin said: “This agreement builds on our long-standing and strategic relationship with the Government of Iraq and delivers access to a material new resource opportunity, within one of the world’s most prolific hydrocarbon provinces.

“It will enable us to bring our experience of managing giant fields to realise the potential of this important asset for Iraq, working alongside and in close partnership with NOC and NGC.”

BP anticipates the formation of a stand-alone incorporated joint venture to manage its interests in the operator.

BP and Iraq finalised technical terms for the redevelopment of the project in December 2024.

The company has been in talks with the Iraqi Government over the deal since last year.

The investment is expected to deliver significant economic benefits to the Kirkuk region including job creation, improved local supply chain capabilities and broader economic growth.