Turkey and BP Shift the Power Dynamics in Northern Iraq

Turkey and BP Forge Strategic Energy Alliance in Northern Iraq

Turkey's state-run energy company TPAO has recently entered into a comprehensive oil and gas partnership with British energy giant BP, signaling a notable shift in the dynamics of northern Iraq's energy sector. This new agreement encompasses field development, exploration, export infrastructure, and regional gas transportation, positioning both companies at the forefront of Iraq's upcoming upstream growth, with Kirkuk as the initial focus. Following TPAO's recent collaborations with ExxonMobil and Chevron, this move with BP highlights Turkey's growing ambitions in one of Iraq's most politically sensitive energy regions. Additionally, it brings renewed attention to BP's longstanding commitments in Kirkuk, which are key to understanding the broader geopolitical consequences of this partnership.

Turkey’s Unique Geopolitical Role

Few nations are as uniquely situated between East and West as Turkey, both geographically and politically. This position allows Ankara to influence regional power balances by shifting its alliances as needed. The emphasis on Kirkuk—a region straddling the divide between Iraq’s central government and the Kurdistan Regional Government (KRG)—adds further weight to the deal. TPAO aims to boost its international upstream production by targeting an increase of 500,000 barrels of oil and gas per day by 2028. BP, for its part, has set an initial production goal of 328,000 barrels per day from a five-field development agreement with Iraq’s Oil Ministry. These fields include the Baba and Avanah domes of the Kirkuk oil field, as well as Bai Hassan, Jambur, and Khabbaz. Output is projected to reach at least 450,000 barrels per day within two to three years, with further increases under consideration. Production costs are expected to remain low, around $2-4 per barrel, matching the world’s lowest figures seen in Iran and Saudi Arabia.

Resource Potential and Gas Utilization

The production targets appear achievable, as the five fields are believed to contain up to 9 billion barrels of oil reserves—though some experts suggest the actual figure could be much higher, possibly an additional 11 to 12 billion barrels in nearby areas. BP’s involvement extends beyond oil extraction, focusing also on capturing associated gas, with an initial goal of 400 million standard cubic feet per day. BP brings significant expertise, having partnered in the Basra Energy Company to support Rumaila oilfield development and reduce emissions, and working with Basrah Gas Company to manage gas output at Rumaila.

Reshaping Iraq’s Gas Sector

Restructuring Iraq’s gas industry is arguably even more critical than increasing oil production. Western efforts to establish a lasting presence in Iraq have long been challenged by Iran’s deep-rooted influence through various channels. Baghdad’s reliance on Iranian gas and electricity—accounting for about 40% of its power supply—has had several consequences: it has dampened political opposition to the Iran-aligned status quo, reduced incentives for Iraq to develop its own gas resources, and discouraged major Western firms from investing in large-scale projects like the Common Seawater Supply Project. The logical solution is to reduce gas flaring and utilize this resource for domestic power generation, petrochemical feedstock, or exports. The TPAO-BP agreement is expected to support this transition toward more efficient gas use.

Shifting Regional Alliances

Iraq’s recent openness to Western companies has coincided with a more assertive U.S. foreign policy under Donald Trump’s second term. The administration implemented targeted actions against Iran and increased sanctions on countries perceived as supporting Tehran, including Iraq. The U.S. and U.K. have encouraged the Kurdistan Region to distance itself from Chinese, Russian, and Iranian entities linked to the Islamic Revolutionary Guards Corps. The Kurdistan Region also serves as a strategic base for monitoring Iran. Conversely, Iraq’s central government, closely aligned with China and Russia, has previously sought to exclude Western firms from energy deals, viewing this as a step toward ending Western dominance in the Middle East.

Turkey’s Renewed Western Orientation

Turkey’s latest initiatives in northern Iraq reflect broader regional realignments. Since the start of Trump’s second term, Ankara has moved closer to its Western partners, adjusting its foreign policy in ways that are increasingly evident across the Middle East. By collaborating with BP in Kirkuk—a region once considered within Russia’s sphere of influence—Turkey is reaffirming its NATO ties. As Iraq seeks to reduce its dependence on Iran by engaging with Western companies, Turkey’s pivot underscores a larger trend: key nations along the traditional East-West divide are quietly moving closer to Washington and London, reshaping the strategic landscape of the region.

By Simon Watkins for Oilprice.com