) intends to ink an initial agreement in early September relating
to the revival of Iraq's northern Kirkuk oilfield.
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The deal could spark off regional politics as the field overlaps
the border with the autonomous Kurdish region. BP, which is
already working at Iraq's largest producing field, Rumaila, is
expected to gain access to considerable reserves in the north
through the Kirkuk deal.
The deal would give Baghdad an experienced partner and facilitate
it in making up for the huge fall in output from Kirkuk. The
British giant is likely to work on - Baba and Avana geological
formations - controlled by Baghdad. The third formation of
Kirkuk, Khurmala, is administered by the Kurdistan Regional
Government and is being developed by the Iraqi Kurdish KAR group.
The yield at the 78-year old field has come down to 280,000
barrels per day (bpd) from 900,000 bpd in 2001. The main reason
behind the decline is years of water injection and dumping of
discarded crude and products into the field.
The Iraq government has asked BP to increase production capacity
to about 600,000 bpd within five years. However, the rate of
development at Kirkuk will not be as rapidly as the giant
southern fields of Rumaila, Zubair and West Qurna-1.
The yield at these southern fields has been enhanced by 600,000
bpd in just two years by BP,
BP's Kirkuk field contract, which has been under discussions for
over a year, is only for 18 months. But it is likely to provide
an opportunity to the company to negotiate a longer-term
BP carries a Zacks Rank #3 (Hold). However, Zacks Ranked #1
(Strong Buy) sector stock,
Range Resources Corp.
), appears attractive for the short term.