Iraq is considering a multi-billion-dollar deal with U.K. oil major BP BP.LN -0.48% PLC to double the output from the Kirkuk oil field, which is one of the country's largest resources, but lies in a disputed territory, a senior Iraqi oil official said Thursday.
Abdul Mahdy al-Ameedi, head of the oil ministry's petroleum contracts and licensing directorate, told The Wall Street Journal that a request has been sent to the cabinet to approve contract negotiations with BP on developing the Kirkuk oil field, which is suffering from massive output declines due to a long period of neglect.
BP is one of several international oil companies already redeveloping old oil fields in the south of Iraq, with the aim of more than doubling the country's oil production to 8 million barrels a day by 2015. The award of the contract to redevelop the large Kirkuk field, in northern Iraq, has been delayed in part because it lies in an area whose control is disputed between Baghdad and the government of the semiautonomous Kurdish region.
Production at Kirkuk, discovered in 1927, has declined to 260,000 barrels a day from 900,000 barrels a day in the early 2000s, after years of injecting water and the dumping of unwanted crude and other oil products in the field.
"We want to bring output from the field to 600,000 barrels a day," said a former Iraqi oil industry official who didn't wish to be named. Production from the field is declining on daily basis, he said.
BP wasn't immediately able to comment.
In addition to BP, two giant oil services companies, Schlumberger Ltd. SLB +0.86% and Baker Hughes Inc., BHI +0.66% have also held talks with the oil ministry on upgrading Kirkuk, said the former oil industry official.
BP is already working in southern Iraq. It is redeveloping the 1.35 million-barrel-a-day Rumaila oil field, Iraq's largest. BP was awarded the Rumaila field during the first post-war bidding round for oil contracts in 2009.
Mr. Ameedi said that BP's contract in southern Iraq could also apply to the Kirkuk deal, with amendments. "Seventy percent provisions of the (possible) contract with BP to develop Kirkuk are ready," he said without giving further details.