Tuesday 21 January 2020 12:29 pm

BP withdraws from Iraqi oil field as expansion falls through

BP has withdrawn from Iraq’s Kirkuk oilfield after it failed to come to a new agreement on the giant field’s expansion.

The oil major’s contract, which expired at the end of last year, was worth $100m (£76.6m), and the British firm informed Iraqi officials it would pull staff out of the site in December, sources told Reuters.

The withdrawal represents a major blow to Iraq’s hopes of tripling the Kirkuk field’s production, and is a sign that ongoing political disruption is putting Western companies off expanding their presence in the Gulf state.

An official at Iraq’s North Oil Company (NOC) confirmed BP’s decision to pull out, saying that it was “obvious” that the study results were not “encouraging for BP to extend its operations.”

BP said that it had completed the field work as contracted and given the NOC its recommendations for further developing the field.

In a statement, the blue-chip said: “In 2013, BP signed a letter of intent with the NOC of the Iraq Ministry of Oil to support field activity studies in Kirkuk. As planned, in December 2019 BP completed field work, studies and recommendations.” 

The NOC had hoped to increase production at the site to 1m barrels a day, which equates to about one per cent of global output.

BP’s involvement at the field has been sporadic due to the advance of fundamentalist group Islamic State, which took control of much of northern Iraq, where the field is situated, in 2014.

Baghdad regained control of the field, which was then contested by the unofficial Kurdish government, in 2017, after which BP resumed its work.

The field is estimated to contain about 9bn barrels of oil, according to BP.

The news came after BP announced that long-standing finance chief Brian Gilvary would step down at the end of June, a few months after chief executive Bob Dudley does the same.

They will be replaced by Bernard Looney and Murray Auchincloss, as the firm shuffles its top team.