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UPDATE 2-Baghdad seeks to involve BP at Kirkuk oilfield

Feb 24 (Reuters) - Baghdad is seeking to involve BP in a major project to revive Iraq's giant northern Kirkuk oilfield, which is suffering from massive declines in production, industry sources said on Friday.

"We envisage BP doing something similar to Rumaila at Kirkuk," said an Iraqi oil executive. He was referring to a $30 billion BP-operated project to develop Iraq's biggest oilfield, located in southern Iraq.

BP executives met Iraq's Oil Minister Abdul-Kareem Luaibi this week in London.

Production at Kirkuk has slumped to 280,000 barrels per day from 900,000 bpd in 2001 after years of injecting water and dumping unwanted crude and products into the field.

Iraqi officials would like to see BP work to stem declines at this 77-year old workhorse and then raise capacity to around 600,000 barrels per day in five years, the sources said.

"BP has been giving the Ministry of Oil some technical advice on Kirkuk, but it's nothing more than that so far," said another industry source.

The UK oil major downplayed the possibility of taking on a mega-project at Kirkuk.

"We are not aware of any proposals for the development of Kirkuk or any other fields," said a BP spokesman. "We would of course consider opportunities for further investment in Iraq as we would opportunities elsewhere in the world."

The problems at Kirkuk forced Iraq's state North Oil Co, the field's operator, to turn to the world's top service companies at the end of last year, issuing a tender to rehabilitate the ageing field. But industry sources say the process went nowhere.

Iraq put Kirkuk on the block in its first postwar oil auction in 2009. A consortium led by Royal Dutch Shell offered to boost flows to 825,000 b/d for a fee of $7.89 a barrel, but Baghdad insisted on payment of $2 a barrel.

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