BP reportedly seeking partners for Kirkuk development

BP is actively canvassing for a partner to share the capital burden of redeveloping the historic Kirkuk oilfield, as the British supermajor accelerates its pivot back toward high-margin hydrocarbon growth. According to sources cited by Bloomberg last week, a process is underway to identify investors willing to share costs and technical responsibilities for the project in northern Iraq, though any formal agreement is likely to extend into next year.

The search for a partner underscores BP’s renewed commitment to the Middle East, a region offering lower production costs compared to other global basins. This follows the company’s strategic recalibration away from an aggressive reduction in oil and gas output, as it seeks to shore up earnings.

The Kirkuk development contract, a cornerstone of BP’s Iraqi portfolio alongside the southern Rumaila field, covers the rehabilitation of the Baba and Avanah domes, as well as the adjacent Bai Hassan, Jambur, and Khabbaz fields. Reuters reported on 4 February that BP is expected to invest between $20bn and $25bn over the course of a 25-year profit-sharing agreement (PSA).

The commercial terms link BP’s remuneration to its ability to boost output while containing costs. Iraq’s Oil Minister, Hayyan Abdul Ghani, has stated that the objective is to double production capacity from the current level of just over 300,000 barrels per day (bpd) to around 600,000 bpd. Bloomberg sources indicated that annual operating costs are projected to be in the region of $1bn.

While BP structures the long-term investment framework, the state-owned North Oil Co. (NOC) has already commenced interim rehabilitation works. Shafaq News reported that NOC has successfully reactivated 35 dormant wells across the Kirkuk region, including 17 in the Bai Hassan field and seven in the main Kirkuk reservoir.

Amer Khalil Ahmed, NOC’s director general, told Shafaq News that technical teams are intensifying operations at the Sarlu and Sarbashakh stations to sustain this momentum. In early 2025, production stood at roughly 330,000 bpd, the majority of which is allocated to domestic refining, with a residual 10,000 bpd exported to Jordan.

The redevelopment of Kirkuk is critical to Baghdad’s wider ambition of raising national production capacity to 6mn bpd by 2029. However, the project remains sensitive to the complex political dynamics between the federal government and the semi-autonomous Kurdistan Regional Government (KRG).

Exports from the north have been suspended since March 2023 following an International Chamber of Commerce arbitration ruling that halted flows through the Iraq-Turkey pipeline. However, legislative breakthroughs in Baghdad may signal a thaw. Shafaq News reported that the Iraqi government recently approved budgetary amendments designed to resolve fiscal disputes with Erbil. Deputy Speaker Shakhawan Abdullah noted on 2 February that “the obstacles to oil exports from the Kurdistan Region have been resolved,” potentially clearing the way for northern crude to reach international markets once more.

For BP, the successful rehabilitation of Kirkuk – discovered by its corporate forebears in 1927 – would cement its position as a dominant player in Iraq’s energy sector, balancing its exposure between the southern giants and the northern frontier.