BP Considering Plan to Spin Off Iraq Operations Into New Company, Sources Say

By Sarah McFarlane and Benoit Faucon 

LONDON -- BP PLC is working on a plan to spin off its operations in Iraq into a stand-alone company, according to people familiar with the matter, as the oil giant shuffles its assets and investment plans in its pivot toward lower-carbon energy.

The new company would hold BP's interest in Iraq's giant Rumaila oil field -- one of the world's largest -- and be jointly owned by China National Petroleum Corp., one of the British company's partners at the site, the people said. The new entity would hold its own debt, separate from BP, and is expected to distribute profits via dividends, the people added.

The plan is aimed at giving BP more flexibility to invest in low-carbon energy by enabling it to reduce its spending on oil and gas, the people said.

Any such move would underscore how some European oil companies are backing away from decades of pioneering exploration in sometimes challenging locations to refocus on where future energy demand is expected to grow: low-carbon fuels and electricity.

The potential move would have particular significance for BP because of its history in Iraq, dating to the 1920s. BP was the first international oil business to return to Iraq after the U.S.-led invasion.

For BP to go ahead with a new company for its Iraqi operations, it would first need to secure the agreement of state-backed Basra Oil Company and Iraq's national oil company, the State Organization for Marketing of Oil, or SOMO, which are part of the Rumaila Operating Organization.

BP's plan for its Iraqi business is similar to what it recently said it was considering in Angola, the people familiar with the matter said.

--Ben Dummett contributed to this article.

(END) Dow Jones Newswires

June 11, 2021 11:18 ET (15:18 GMT)

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