BAGHDAD (Reuters) -Iraq will share profits with BP from developing its giant Kirkuk oil and gas fields, two officials said on Tuesday, as the country moves away from low-margin service contracts to speed up production growth and lure back Western majors.

Several oil majors, including BP, in recent years turned to other countries offering better terms. They complained the traditional oil service contracts in Iraq that paid a flat rate for every barrel of oil produced after reimbursing costs, prevented them benefiting from rising oil prices.

Iraq and BP, which is returning after a nearly five-year absence, signed a preliminary agreement earlier this month to develop four oil and gas fields in northern Iraq's Kirkuk. BP has estimated the Kirkuk field holds about 9 billion barrels of recoverable oil.

The two oil ministry officials told Reuters the contracts with BP to develop the Kirkuk, Bai Hasan, Jambour and Khabbaz fields would be on a profit-sharing model.

BP declined to comment beyond its Aug. 1 statement on the preliminary deal.

Speaking on condition of anonymity because they were not authorised to speak to the press, the officials said the oil ministry and BP were expected to sign a confidentiality agreement this week, after which Iraq will hand over the data package for Kirkuk's four fields and installations.

A final agreement is expected by the end of this year, the officials added. BP had said it expected negotiations over the preliminary agreement to be complete early in 2025.

BP and the Iraqi oil ministry signed in 2013 a letter of intent to study developing Kirkuk.

That deal was put on hold in 2014 when the Iraqi military collapsed in the face of Islamic State's advance in northern and western Iraq, allowing the Kurdish Regional Government (KRG) to take control of the Kirkuk region.

Baghdad regained full control of the deposit from the KRG in 2017 after a failed Kurdish independence referendum, at which point BP resumed its studies on the field.

But in late 2019, BP pulled out of the oilfield after its 2013 service contract expired with no agreement on the field's expansion.

Iraq, the second biggest producer in the Organization of the Petroleum Exporting Countries behind the group's de facto leader Saudi Arabia, has the capacity to produce almost 5 million barrels per day.

Kirkuk was discovered in 1927 and marks the birthplace of Iraq's oil industry. Its fields produce about 245,000 barrels per day, the officials said.

BP said earlier this month that rehabilitating existing facilities, building new ones, where needed, and other measures could stabilise production and reverse decline at Kirkuk.