ERBIL, Kurdistan Region (Kurdistan 24) – Russian oil and gas giant Rosneft on Wednesday announced they had signed a deal with the Kurdistan Regional Government (KRG) to develop five oil blocks despite escalating tensions in the region.
In an official statement, the Russian crude producer said it had signed “documents required to put in force” production sharing agreements with the KRG which would allocate 80 percent of the projects to Rosneft.
“Rosneft may pay a fee of as much as $400 million, half of which could be repaid in oil pumped from the deposits,” the Russian oil giants said.
According to initial estimates, if exploration operations are successful, full-field production at the Region's oilfields could be possible from 2021.
“The blocks may have some 670 million barrels of recoverable oil reserves according to conservative estimates,” Rosneft said. “Exploration and ‘pilot’ production [are] seen as early as next year.”
“The new agreements will allow us to talk about [the] full-fledged entry of the company in one of the most promising regions,” the statement added.
The Russian oil producer noted the terms of the agreements were similar to the KRG’s deals with other international companies.
The deal comes in the aftermath of the Kurdistan Region’s independence referendum resulting in increased tensions between the KRG and the central government in Baghdad.
Kirkuk, an oil-rich city long disputed between Erbil and Baghdad, was included in the independence vote.
On Monday, both Iraqi forces and the Shia Hashd al-Shaabi militia led an incursion into the multi-ethnic city, which had been under the protection of Peshmerga since mid-2014 after the Iraqi army collapsed and failed to defend the area from the Islamic State.
Earlier this month, Russian President Vladimir Putin said his country would not “interfere” in the dispute between Kurdistan and Iraq, adding Russia was “carefully managing” its ties with Baghdad and Erbil to avoid encouraging further instability.
Editing by G.H. Renaud