Rosneft signs landmark Kurdistan contract

ERBIL, October 19, 2017 – Rosneft has signed a much-anticipated contract for the development of five oil and gas blocks in the Kurdistan Region of Iraq, the company revealed on Wednesday.

The Russian company will take an 80% stake in the blocks and may pay an upfront fee of USD 400 million for farm-in and geological information. While the five blocks have yet to be identified, Rosneft reports their combined recoverable crude reserves could total 670 million barrels.

In a statement on its website, Rosneft said it would undertake a campaign of geological exploration in the blocks and target pilot production as early as 2018. The deal will include access to the Kurdistan Crude Export Pipeline system, which the company says it expects will see capacity expanded from 700,000 bpd to 950,000 bpd.

The timing of Wednesday’s announcement comes as welcome support for a region currently facing threats from Iraq, Turkey and Iran and as yet seeing little support from its US allies in the conflict over the disputed region of Kirkuk that heated up following a late-September independence referendum.

The support from Rosneft that began in early 2017 has provided the Kurdistan Region with a critical path forward in its independent economic development. It has allowed the regional government to settle debts with key IOCs and pave the way for stepped-up production of oil and gas.

See below for a timeline of the Russian oil giant’s moves in the Kurdistan Region in 2017:

February 21: Rosneft signs deal for Kurdistan crude