The recent announcement that Turkey’s state-owned TPAO has signed a wide-ranging oil and gas cooperation agreement with Great Britain’s BP marks a potentially significant shift in the strategic landscape of northern Iraq. The new framework — covering field development, exploration, export capacity and regional gas transport — places both companies squarely at the centre of Iraq’s next phase of upstream expansion, with Kirkuk identified as the immediate priority. Coming on the heels of TPAO’s recent cooperation deals with ExxonMobil and Chevron, the partnership with BP signals a far more ambitious Turkish push into Iraq’s most politically sensitive energy territory. It also reopens the file on BP’s major Kirkuk commitments, which remain central to understanding the deeper geopolitical implications of this new alignment.
Few countries so starkly straddle the world’s great dividing line between East and West — geographically, politically, and strategically — as Turkey. It is a position that allows it to tilt the regional balance with even small shifts in alignment and to lean into either the Western order or the Eurasian sphere when it suits Ankara’s interests. The fact that this deal prioritises cooperation in Iraq’s Kirkuk fields — themselves situated in a highly sensitive area between the Federal Government of Iraq in the south and the Kurdistan Regional Government (KRG) in the north — exacerbates the deal’s already high significance. In broad terms, TPAO is targeting gains of 500,000 barrels of oil and gas production per day by 2028, as part of its efforts to expand its upstream operations internationally. For BP, it has agreed a preliminary production target of 328,000 barrels per day (bpd), from the five-field development deal it signed with Iraq’s Oil Ministry. These fields comprise the Baba and Avanah domes of the Kirkuk oil field and the three adjacent sites of Bai Hassan, Jambur and Khabbaz. This output is expected to rise to at least 450,000 bpd within the next two to three years, and then to be reassessed with a view to an increase in both output and plateau production numbers. The lifting cost of many of these barrels will be at or close to Iraq’s average of $2-4 per barrel (pb), which in turn is the joint lowest such figure in the world, along with Iran and Saudi Arabia.
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These production figures look eminently realistic, as the five fields are already estimated to hold up to 9 billion barrels of oil reserves, although these are very conservative estimates, a senior source who works closely with Iraq’s Oil Ministry exclusively told OilPrice.com last year. “There’s at least another eleven or twelve billion barrels across the near surrounding area, and possibly much more,” he underlined. As with TPAO, BP’s efforts will not just be on oil development but also on capturing the gas associated with much of that oil drilling, with the initial target being 400 million standard cubic feet per day (mmcf/d) of associated gas. The British firm is a world leader in this field, being a partner in the Basra Energy Company, which provides technical support for the Rumaila oilfield development to help reduce flaring and emissions, and works with the Basrah Gas Company to manage the gas produced at Rumaila.
It is arguably the restructuring of Iraq’s gas sector that is even more of a priority than increasing its oil output. The longstanding problem for the West in its attempt to establish an enduring presence in Iraq has been the even longer-standing influence of neighbouring Iran through its political, economic, religious, and military proxies, as fully analysed in my latest book on the new global oil market order. The clearest expression of this has been Baghdad’s continued reliance on Tehran for around 40% of its power supply — delivered through gas and electricity imports — a dependency that has produced three major consequences. First, the constant threat of immediate and prolonged power cuts, layered on top of those already endured, has muted political dissent against the Iran-aligned status quo. Second, it removed any urgency for Baghdad to exploit its own vast volumes of associated gas for financial gain, whether through exports or as feedstock for high-value petrochemicals projects such as the long-stalled Nebras initiative. And third, it discouraged top-tier Western firms from committing capital to the large-scale developments such as the Common Seawater Supply Project that could lift Iraq’s oil output to levels capable of elevating it to the position of the world’s second-largest oil producer after the U.S. The obvious solution to Iraq’s reliance on Iran was to reduce the vast amount of gas that Baghdad flared as a consequence of its oil drilling and to use this instead to generate power, or as feedstock for petrochemicals production, or to monetise through export sales. This new deal between TPAO and BP will also be part of that process to move away from gas flaring to its being used more productively.
It is interesting to note that Iraq’s willingness to engage with Western firms in recent months coincided with the much more aggressive and well-organised approach of Donald Trump’s second term as U.S. President. This time around, he arrived at the Oval Office with clear plans and specific policies already in place before he and his team sat down, which meant he could put into effect executive orders that dealt with his most pressing problems — with one being Iran. An element of this was attacks on the country itself, with the help of Israel, and another part was dramatically increasing the sanctions on countries seen as supporting Iran, with Iraq near the top of the list. In terms of the broader Iraq, the U.S. and Great Britain want the northern Kurdistan Region, run by the pro-West KRG, to terminate all links with Chinese, Russian and Iranian companies connected to the Islamic Revolutionary Guards Corps over the long term. The U.S. and Israel also have a further strategic interest in utilising the Kurdistan Region as a base for ongoing monitoring operations against Iran. On the other hand, the broad geopolitical stance of the Federal Government of Iraq (aligned perfectly with that of its key sponsors, China and Russia) – up until Donald Trump secured a second term as president, at least — was conveyed to OilPrice.com some time ago by the senior Iraq source, who said: “By keeping the West out of energy deals in Iraq, the end of Western hegemony in the Middle East will become the decisive chapter in the West’s final demise.”
Ankara’s renewed engagement in northern Iraq needs to be seen in this wider context of shifting regional alignments. Since Donald Trump’s second presidency began, Turkey has edged back toward its Western identity, recalibrating its relationships in ways that have become increasingly visible across the Middle East. Working alongside BP in the Kirkuk fields — a region Russia once treated as part of its informal sphere of influence, as fully analysed in my latest book — is a clear signal that Turkey is once again wearing its NATO-member hat more firmly than its Russia-aligned one. And just as Iraq has begun to re-engage with Western firms to reduce its dependence on Iran, Turkey’s own pivot reinforces a broader regional trend: key states along the old East–West fault line are quietly repositioning themselves toward Washington and London, reshaping the strategic map of the Middle East in the process.
By Simon Watkins for Oilprice.com
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