Deal comes after Iraqi government forces take back the oil fields under the KRG's Peshmerga forces, who had occupied Kirkuk in 2014 to prevent the city from falling to Daesh.

An oil field is seen in Dibis area on the outskirts of Kirkuk, Iraq on October 17, 2017.
An oil field is seen in Dibis area on the outskirts of Kirkuk, Iraq on October 17, 2017. (Reuters)

Iraq signed a contract on Thursday with British energy giant BP to develop oil fields in the northern province of Kirkuk that were retaken from Peshmerga forces last year.

The agreement was signed by Iraqi Oil Minister Jabbar al Luaybi in Kirkuk, north of Baghdad, where the North Oil Company has its headquarters, AFP reporters said.

Iraqi forces reclaimed a string of major oil fields in Kirkuk after the autonomous Kurdish Regional Government (KRG) in the country’s north voted for independence in a controversial referendum opposed by Baghdad in September.

The KRG’s Peshmerga forces had taken over the fields in 2014 during the chaos of Daesh's rampage across the country and exported oil through their own pipeline.

Work to renovate a parallel Iraqi pipeline could take up to two years, according to experts.

Kirkuk province now has a production capacity of 420,000 barrels a day (bpd), according to Baghdad, but only 120,000 barrels a day are being pumped and exports from the region are at a halt.

Iraq, the second-largest producer in the OPEC cartel after Saudi Arabia, aims to increase the output of the Kirkuk oil fields to one million barrels a day, Luaybi said in November.

The Iraqi oil ministry signed a consultancy contract with BP in 2013 to help the state-owned North Oil Company develop the Havana and Baba Gurgur fields in Kirkuk province.

But it was never implemented as Baghdad lost control of the fields to Peshmerga forces the following year.

Iraq reported its oil exports hit 109.6 million barrels a day in December, the same month that the government announced victory over Daesh.

Source: AFP