In a further sign of renewed investor confidence in Iraq, BP signed a memorandum of understanding (MoU) this month with the federal oil ministry to develop the giant Kirkuk oil field. The aim is to increase production from around 150,000 b/d, to 700,000–750,000 b/d. The field has a current capacity of around 450,000 b/d.
More symbolically, this agreement marks the re-imposition of Baghdad’s authority over these northern fields, which have been under the control of the Kurds since Peshmerga forces swept into Kirkuk in 2014 to defend the governorate from the Islamic State (IS) advance. The deal reinforces Prime Minister Haider al-Abadi’s victory over the Kurds following the referendum on Kurdish independence, when federal forces retook the disputed areas, including Kirkuk, in October 2017.
BP struck a previous deal with the federal authorities over the Kirkuk field in 2013. This was rejected by Erbil, the Kurdistan capital, and overtaken by events — including the expansion of IS and resulting Kurdish takeover of Kirkuk — which forced the firm to leave the region in 2015.
The latest MoU, signed by federal oil minister Jabar al-Luaibi and BP’s head of Middle East Michael Townshend in Kirkuk on 18 January, signifies a renewed commitment to Iraq and to Baghdad, in particular by BP, which has pledged to support the federal oil ministry in redeveloping the field over the long term. According to BP, it will be providing modern technology and expertise to the state-owned North Oil Company (NOC) as well as undertaking seismic surveys on the field.
While this is a major achievement for Baghdad, opening the way for a significant increase in oil production, the deal comes as yet another blow to Erbil. Kirkuk’s oil resources had been seen by the Kurds as the key to their eventual independence. To see Baghdad’s control over the resources solidified in this way must have hit particularly hard.
The Kurds have been notably silent about the deal, presumably because there is little they can do and because they are embroiled in other problems. It looks as though they have made a political decision not to oppose it publicly.
Tahseen Kahiya — a Turkoman member of the Kirkuk Governorate council — did complain to the media that the council had not been consulted about the MoU. BP and the federal oil ministry should have ‘co-ordinated with us because we are a partner in this process’, he said. BP, or any other IOC wishing to operate in Kirkuk, would ultimately have to consult with the council, he added, because they would need its support and co-ordination over issues such as security.