Two officials revealed on Tuesday that Iraq will split earnings with British Petroleum (BP), a British multinational oil and gas company headquartered in London, and boost the development of oil and gas reserves in the northern Iraqi governorate of Kirkuk.
In an effort to attract back foreign oil companies and accelerate production growth, Iraq is shifting to narrow-margin development contracts, according to Reuters.
The Iraqi government signed a Memorandum of Understanding (MoU) with BP in early August to rehabilitate and develop four oil fields operated by the North Oil Company (NOC) in Kirkuk.
The MoU was signed by the Iraqi Minister of Oil, Hayan Abdul-Ghani, and BP chief executive officer, Murray Auchincloss, according to a statement released by the Prime Minister’s Office (PMO).
The MoU is part of the Iraqi government’s effort to maximize investments in the energy sector in order to improve and expand oil production, solar energy, and gas utilization in the area.
As part of the MoU, BP also suggests looking into potential investments in power generation and the installation of solar power facilities in the area.
In mid-August, sources told Reuters that Iraq is changing its approach to working with international oil companies for the first time in decades in an effort to draw more capital into the country’s hydrocarbon industry.
As part of the supplementary fifth and sixth licensing rounds initiated by the Iraqi government to increase the country’s oil and gas production, the Iraqi Ministry of Oil signed this month 13 preliminary agreements to develop oil and gas exploration blocks and fields.
The Iraqi Oil Ministry offered oil corporations profit-sharing contracts with better conditions than technical-service contracts.
Iraq attempts to attract additional investment by adopting profit-sharing contracts for the supplementary fifth and sixth licensing rounds instead of basing the agreements on technical service conditions.
Production-sharing conditions are anticipated to be more profitable for foreign companies than traditional technical service contracts, which pay a fixed fee for each barrel of oil produced after covering costs.
Source:https://www.iraqinews.com