On Friday, Rosneft and the government of Kurdistan signed production-sharing deals for five oil blocks, with Rosneft saying it would also aim to explore for gas in the future.
Igor Sechin, Rosneft chief executive and a close ally of Russian President Vladimir Putin, said the company was widening cooperation with Kurdistan following the first direct purchases of Kurdish oil for Rosneft’s German refineries earlier this year.
“The agreements … set an example of well-weighed investments in one of the key Middle East regions, which will make it possible for the company to expand its exploration and production geography, provide feedstock for Rosneft’s growing refining network and to raise profitability of our international assets,” Sechin said in a statement.
The documents were signed by Sechin and Kurdish natural resources minister Ashti Hawrami on the sidelines of Russia’s main investment show, the St Petersburg International Economic Forum, where Putin was due to meet Kurdish premier Nechirvan Barzani.
It is the biggest deal made by a Russian company so far at the St. Petersburg International Economic Forum (SPIEF 2017).
Kremlin-controlled Rosneft this year became the first oil major to pre-finance Kurdish crude exports, an activity long dominated by trading houses, which had bankrolled the semi-autonomous region amid its fight against Islamic State and a budget crisis caused by low oil prices.
Rosneft will get access to a major regional transportation system with the capacity of 700,000 barrels per day (bpd), the company said. It is planned to expand capacity to more than 1 million bpd by the end of 2017.
The documents were signed ahead of a meeting between Russian President Vladimir Putin and the Prime Minister of Iraqi Kurdistan Nechirvan Barzani.
Rosneft CEO Igor Sechin and Minister of Natural Resources for the Kurdistan Regional Government Dr. Ashti Hawrami signed the contracts within the framework of the Forum.
The Russian company will get access to “one of the most promising regions of the developing global energy market with expected recoverable reserves in the order of 45 billion barrels of oil and 5.66 trillion cubic meters of gas (according to the estimate of the Ministry of Natural Resources of Kurdistan Region),” said Rosneft.
“The agreement includes five Production Sharing Agreements (PSA). It includes production; it is a contribution to infrastructure… It is a fairly large supply contract on favorable terms for Rosneft. As a result, we get access to a large pipeline that goes from Kurdistan to Turkey. It’s a contract for 20 years,” Rosneft spokesman Mikhail Leontyev told RT.
“It’s a strategic investment in one of the most strategically developing regions. American and other players want to get access to the region. Kurdistan is highly promising in terms of oil production, and it wants to diversify its output,” said Leontyev.