Tensions Rise Over BP Kirkuk Deal

By John Lee.

Reuters has reported that BP will undertake work to arrest declining production at the Kirkuk oilfield, in a move that has outraged the Kurdistan Regional Government.

Abdul Mahdy al-Ameedi, head of the oil ministry's Petroleum Contracts and Licensing Directorate (PCLD), told The Wall Street Journal that a request has been sent to the cabinet to approve contract negotiations with BP on developing the field which straddles the border and lies in disputed territory.

BP will be working on the Baghdad-administered side of the border on the Baba and Avana geological formations. Kirkuk's third formation, Khurmala, is controlled by the (KRG).

At the start of its project, BP will make a "special allocation" of $100 million to help stop Kirkuk's decline and carry out thorough survey.

Production at Kirkuk has declined to 260,000 barrels a day from 900,000 barrels a day in the early 2000s, but the ministry wants to bring output to 600,000 bpd.

(Sources: Reuters, Bloomberg, Wall Street Journal)

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