ERBIL, Kurdistan Region of Iraq - Iraq activated contracts with British energy giant BP on Thursday to develop four Kirkuk oil fields and rehabilitate gas facilities, with initial production set at 328,000 barrels per day.

Iraqi Oil Minister Hayyan Abdul Ghani oversaw the signing of the activation agreement between the state-owned North Oil Company, North Gas Company, and BP on Thursday, stating that the contract will help provide fuel for power generation and also create job opportunities.

The four oilfields named in the contract include the Baba and Avanah domes of the Kirkuk oilfield and three adjacent fields - Bai Hassan, Jambur, and Khabbaz, currently operated by the North Oil Company.

Initial production has been set at 328,000 barrels per day, with plans to increase output beyond that level, Ghani said at the signing ceremony according to a statement from the ministry.

“Establishing the initial production rate at 328,000 barrels per day is considered the starting point of the contract, and anything above that represents development operations. We hope through this contract to increase crude oil production and consequently increase associated gas investment rates,” the minister said.

“The contract will secure employment attraction in Kirkuk and nearby provinces, in addition to providing fuel for electricity generation and other local industries,” he added.

In March, Iraq’s Ministry of Oil announced a contract with BP (formerly British Petroleum) to rehabilitate the four oil fields in Kirkuk.

The deal followed an agreement signed by Baghdad and London in late February to restore the fields, which itself came after a Memorandum of Understanding (MoU) was signed during Iraqi Prime Minister Mohammed Shia’ al-Sudani’s visit to the UK in mid-January.

BP's director in Iraq, Zaid al-Yasiri, said on Thursday that “activating the contract is a key step to strengthen genuine cooperation and partnership with the North Oil Company and North Gas Company to develop oil fields in Kirkuk.”

In turn, the director general of North Oil Company, Amr Khalil, explained that activating the contract to develop the oil fields and determining initial production marks the start of operations to boost oil output, which he said will bring significant benefits to the province.

Ahmed Abdulmajid, director general of North Gas Company also noted that the contract with BP will raise gas production after rehabilitating and developing the company’s facilities, increasing fuel supply to power stations, and providing gas for local industries.

The deal entails the rehabilitation of existing facilities where required, the construction of new facilities, including gas expansion projects, and a drilling program at the Kirkuk fields, offering the potential to stabilize production and reverse decline, restoring production levels from the salient oilfield to a positive trajectory.

Kirkuk is known for its vast natural resources and oil-rich fields, with BP estimating its oil reserves at approximately five billion barrels.