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By Huda Majeed and Ahmed Rasheed
KIRKUK/BAGHDAD, Iraq, Jan 18 (Reuters) - Iraq signed a memorandum of understanding with BP on Thursday to boost production capacity at its northern Kirkuk oilfields, the country’s oil ministry said in a statement
The oilfields were taken back under Baghdad’s control last October after Iraqi government forces dislodged Kurdish fighters from the area.
Oil Minister Jabar al-Luaibi and BP’s president for the Middle East region, Michael Townshend, attended the signing ceremony at the Kirkuk office of the Iraqi state-run North Oil Company, which operates the fields, the ministry said.
The agreement provides for BP to boost Kirkuk’s output capacity to 750,000 barrels per day (bpd), more than twice existing capacity, the statement added, citing Townshend.
“The company will carry out seismic survey operations and and studies to develop the fields,” the ministry statement quoted the BP executive as saying.
Luaibi initiated the talks with BP in October, only days after the Kurdish fighters were driven from the area.
Oil exports from the field, transported by pipeline to Turkey, halted after the Iraqi military operation, which was conducted in retaliation against an independence referendum held on Sept. 25 by the semi-autonomous Kurdistan Regional Government (KRG).
Iraq plans to start trucking crude from Kirkuk to Iran at the end of the month.
BP had agreed in 2013 to help Baghdad to halt a huge decline in output from Kirkuk. The KRG took control of the Kirkuk region in 2014, when the Iraqi army collapsed in the face of Islamic State’s sweeping advance in northern and western Iraq.
The Kurdish move prevented the fields from falling into the hands of the militants.
Kirkuk is one of the biggest and oldest oilfields in the Middle East, estimated to contain about 9 billion barrels of recoverable oil, according to BP.
BP has provided technical assistance in the past to the North Oil to aid the redevelopment of the Kirkuk field.
Iraq is the Organisation of Petroleum Exporting Countries’ second-largest producer behind Saudi Arabia.
Luaibi said on Saturday that Iraq oil output capacity is nearing 5 million bpd. However, it is currently producing 4.4 million bpd in compliance with an agreement between oil exporters to support crude prices.
Writing by Maher Chmaytelli; Editing by Gareth Jones and David Goodman