Iraqi Kurdistan to Invest $1Bln From Rosneft Contracts in Oil Field Development

Iraqi Kurdistan to Invest $1Bln From Rosneft Contracts in Oil Field Development
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AFP 2017/ ALI AL-SAADI Business15:20 07.11.2017(updated 15:40 07.11.2017) Get short URL
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A high-ranking member of the Iraqi Kurdistan parliament has commented on the region’s cooperation with a Russian energy giant.

CAIRO (Sputnik) – Iraqi Kurdistan is planning to invest $1 billion from contracts with Russian oil giant Rosneft in the development of five oil fields in the region, according to Izzat Saber, the head of the finance and economics issues committee in the Kurdish parliament.

“The third billion will be invested in the development of five oil blocks in the region of Kurdistan — Avana, Bey Hasan, Miran, Ain Zalah, Bagwan,” he told Sputnik.

Saber, who is also a member of the regional parliament’s committee on energy and minerals, said, “Three of these blocks are now under the control of the Iraqi military, not the Kurdistan regional government.”

The statement comes in the wake of Rosneft and the regional government of Iraqi Kurdistan concluding an agreement on cooperation in the oil and gas sector in February 2017. Over half a year later, the parties have held talks on the possibility of the company’s participation in the project to finance the construction of a gas pipeline in Kurdistan, with a separate agreement expected to be signed before 2018.

The sum of contracts with the Russian oil giant exceeds $3 billion, according to Saber, of which $1 billion was paid in advance and was used to repay the debt to UAE-based Dana Gas, and another $1 billion is planned to be invested in the construction of a gas pipeline to Turkish Ceyhan.

On October 20, Rosneft and Iraqi Kurdistan announced the launch of a project to operate the pipeline, wit the share of the Russian company in the project may reach 60 percent.

According to Rosneft, it signed documents necessary for the entry into force of production sharing agreements (PSAs) on five deposits located in the Iraqi Kurdistan region.

Erbil-Rosneft Contract Envisions Company Buying Up to 70% of Kurdish Oil

Commenting on the contract, Saber has stated that Iraqi Kurdistan’s contract with Rosneft envisions the Russian company buying 60 to 70 percent of all the oil exported by the region cheaper than global average prices.

“Another provision of the contract is that Rosneft will buy 60 to 70 percent of all oil exports of the region of Kurdistan with cheaper than world-average prices.”

According to Saber, it would be impossible to completely fulfill the contract between Iraqi Kurdistan and Rosneft for the purchase of up to 70% of Kurdish oil and negotiations with Baghdad were needed to deal with the issue.

“This provision [of the contract] will not be fulfilled, as exports from the Kurdistan region decreased from 700,000 to 200,000 barrels per day [after the Iraqi army restored control over the disputed territories]. This means that Rosneft will have to negotiate with the Iraqi government on the way in which this contract was concluded with Kurdistan and the possibility of transferring part of this contract to the government in Baghdad.”

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