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BP seeking new investments in Iraq and Kuwait

BP Iraq Kuwait Reuters//Essam Al-sudani
A worker checks a pipeline valve at the Majnoon oil field. BP is refocusing on fossil fuels in a bid to increase its profits
  • Oil output cut target abandoned
  • Shares down 20% in a year
  • Renewables investments paused

BP is in talks for new investments in Iraq and Kuwait as the company refocuses on oil and gas.

The British energy giant is in discussions to invest in three new projects in Iraq, including one in the Majnoon field near Basra, sources have told Reuters.

In August BP signed an agreement with the Iraqi government to develop and explore the Kirkuk oilfield in the north of the country, which will also include building power plants and solar capacity.

Unlike historic contracts, which offered foreign companies razor-thin margins, the new agreements are expected to include a more generous profit-sharing model.

The company already owns a 50 percent stake in the Rumaila oilfield near the southern border with Kuwait, where it has operated for over a century.

BP is also considering investing in the redevelopment of fields in Kuwait, as well as in South America.

In February, as part of a joint venture between Abu Dhabi national oil company Adnoc, BP invested $1.5 billion in gas exploration in Egypt.

The company’s move back to the Middle East and into oil and gas comes as its share price continues to slide, falling 20 percent over the past year.

As part of the new leadership’s efforts to fix BP’s underperformance, CEO Murray Auchincloss — who took over from Bernard Looney in January — is expected to abandon the company’s pledge to cut production to 2 million barrels of oil per day by 2030. BP has targeted net zero emissions by 2050.

A BP spokesperson said: “As Murray said at the start of year, the direction is the same – but we are going to deliver as a simpler, more focused, and higher value company.” 

BP has invested billions in new low-carbon businesses and sharply reduced its oil and gas exploration team since 2020. But supply chain issues and sharp increases in costs and interest rates have put further pressure on the profitability of many renewables businesses.

Auchincloss has paused investment in offshore wind and biofuel projects in recent months and cut the number of low-carbon hydrogen projects down to 10 from 30. 

A company source told Reuters that while rivals had invested in oil and gas, BP had neglected exploration for a few years.