* Iraq oil minister, BP CEO visit Kirkuk oilfield
* Kirkuk governor pledges full support for BP deal
* BP to boost output from Kirkuk oilfield
KIRKUK, Iraq, Nov 6 Iraq's oil minister and the
chief executive of BP paid a rare visit to the northern
Kirkuk oilfield on Wednesday to win over the local government
before the UK major starts to revive the field, which straddles
the border with autonomous Kurdistan.
Baghdad signed a deal in early September for BP to develop
the giant oilfield, allowing the company to negotiate access to
significant reserves in the north in return for helping to
arrest a huge decline in output.
Kirkuk's oil riches are at the centre of a crisis within the
national government of Sunni, Shi'ite and Kurdish parties over
how to share power. The KRG rejects BP's Kirkuk pact as illegal,
because it has not been consulted.
The project has, however, won crucial support from Kirkuk's
governor, Najimeldin Kareem, a Kurd.
"We will provide complete support for BP to develop Kirkuk
oilfield because it will generate a significant benifit for the
province in relating to petrodollar revenues", Kareem told
reporters in Kirkuk.
Oil officials with Iraq's state-run North Oil Co (NOC) said
Iraqi Oil Minister Abdul Kareem Luaibi accompanied BP CEO Bob
Dudley to the 78-year-old oilfield - where output has slumped to
around 280,000 barrels per day (bpd) from 900,000 bpd in 2001.
"BP has ambitious plans to boost production from the Kirkuk
oilfield to achieve big benefits for Iraq and the people of
Kirkuk," Luaibi told reporters.
The company would work on the Baghdad-administered side of
the border on the Baba and Avana geological formations. Kirkuk's
third formation, Khurmala, is controlled by the Kurdistan
Regional Government (KRG) and being developed by the Iraqi
Kurdish KAR group.
The agreement allows the British oil major - which already
operates Iraq's biggest oilfield, Rumaila - to boost its
exposure in the world's fifth biggest holder of oil reserves.
Baghdad hopes BP will eventually sign a technical service
contract at Kirkuk like the one for Rumaila, an Iraqi oil source
said. The company expects, however, to negotiate better
commercial terms for this contract, industry sources said.
At the start, BP will spend up to $100 million to help stop
Kirkuk's decline and carry out surveys to get a clear picture of
the field. Iraqi officials have said they would like BP to raise
production capacity to around 600,000 bpd in five years.
Iraq's central government and the KRG are locked in a
widening dispute over control of oil exports, oilfields and
territory that is fraying the country's uneasy federal union.
Baghdad insists it alone has the sole authority to sign
deals and export oil, but Kurdistan says the constitution allows
it to agree to contracts and ship oil independently of Baghdad.
Exxon, Chevron and Total have infuriated the central
government by signing lucrative production sharing agreements
with the KRG. BP has no interest in pursuing upstream
opportunities in Kurdistan, industry sources said.
"Today's visit succeeded in securing the complete support
from the local government of Kirkuk and that's exactly what was
needed for BP to start developing the Kirkuk oilfield," a senior
oil official told Reuters.