SUMMARYThe complex variables boundary element method (CVBEM) is used to study interaction between a circular opening and fractures originating from its boundary in a piecewise homogeneous plane. A new complex hypersingular equation for piecewise homogeneous media with a circular opening is obtained. The equation is solved using the CVBEM technique with circular and straight boundary elements and polynomial approximations (with square root asymptotics for crack tip elements) for the unknown functions. The algorithm is veri"ed through comparison with known semi-analytical and numerical solutions that involve interaction between a circular opening and speci"c systems of cracks or other openings. New numerical results concerning the interaction of the circular opening with the cracks and circular inclusions are presented. The method is applied to an important problem in the petroleum industry: modelling propagation of hydraulic fractures in the vicinity of a borehole.