BP Operations in Iraq

= History =

BP's relationship with Iraq dates back as far as 1927, when along with Exxon, Total and Shell, it had a 23.75% share in the Iraq Petroleum Company (IPC). Following contracts signed in the 1930s, the IPC gained full control over Iraq's oil and thus kept Iraq's oil reserves under foreign control for more than 40 years.

BP continued working in Iraq for many years and helped to discover the super giant field Rumaila, located 32 kilometers from the Kuwaiti border, in 1953 before closing its representative office there due to the war with Kuwait in 1990. BP restarted work in Iraq, more specifically on Rumaila, in April 2005 after signing a service agreement with Iraq's oil ministry for an “Integrated Rumaila Oil Field Study.”.

= Activities and Contracts=

Rumaila
BP was the first oil major to secure a long-term contract in post-2003 Iraq. In a venture with China National Petroleum Company, BP made a successful bid for a service contract in the Rumaila oil field, Iraq’s largest, in the first postwar contract licensing round in June 2009. BP and CNPC won the bid after agreeing to cut their requested remuneration fee from US $3.99 per barrel to $2 per barrel. BP holds a 38% stake in the venture, while CNPC holds 37% and Iraq takes the remaining 25%.

BP wrote in its 2009 Annual Review that it intends to increase production in Rumaila from approximately 1 million barrels per day (bpd) to 2.85 million bpd and together with CNPC plans to spend around $15 billion in Rumaila by 2017, according to the Defence Report website. At the end of March 2010 the company announced that it had awarded $500 million in contracts to drill wells at Rumaila and over the course of 2010, BP and CNPC drilled 41 out of the 70 wells originally planned. BP’s former head of production Andy Inglis suggested in April 2010 that the field may become the world’s second-largest by 2015. The Wall Street Journal wrote in March 2010 that if successful, the effort to expand production at Rumaila, along with other fields in Iraq's south, could mark one of the largest expansions of oil production ever achieved.

The UK's Guardian newspaper in July 2011 reported that BP had secretly renegotiated its service contract for the Rumaila field, in which the Baghdad government agreed to pay the firm even when Rumaila oil is not being produced. Under the new terms BP would be immediately compensated for civil disruption or government decisions to cut production. The story quoted critics who see this as a major step away from the original terms of the deal signed in the summer of 2009, including author Greg Muttitt, who called the renegotiation "a backroom deal that gave BP a stranglehold on the Iraqi economy, and even influence over the decisions of OPEC."

Kirkuk
Reuters reported in April 2012 that Iraq's central government in Baghdad wanted BP to revive the aging Kirkuk oil field in northern Iraq, which is suffering from massive production declines. Reuters cited industry sources saying that the government was seeking to strengthen its position in a dispute with semi-autonomous Kurdistan over ownership of northern Iraqi fields, and that bringing BP into Kirkuk could allow the Iraqi government to counter ExxonMobil's move into Kurdistan. The story indicated that BP was actively considering Kirkuk, but that this was in the early stages and negotiations had not yet begun.

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