Erbil, Kurdistan Region, Iraq (cabinet.gov.krd) – In a press conference, following his return from Russia, where he attended the St. Petersburg International Economic Forum, Prime Minister Nechirvan Barzani discussed the initial agreement reached with the Russian major energy company Rosneft.
He said the agreement aims to develop a strategic energy framework to include exploration and production as well as investment in infrastructure development.
Prime Minister Barzani highlighted this to be the first time in three years a major oil company agreed to invest in the Kurdistan Region, and the first time oil will be sold directly to a state-share holder company, instead of trading companies.
He said this agreement would further enhance relations with Russia, a leading country that is also a member of the UN Security Council. He noted this is an economic initiative that will not affect relations with other countries.
According to the agreement, Rosneft will explore and develop five of the 22 blocks announced last year at the Oil and Gas Conference in London.
Prime Minister Barzani noted that Kurdistan Region’s export capacity of 700,000 barrels per day has been reached. “The pipeline of Kurdistan Region cannot export more than this amount. Our plan, with the help of Rosneft, is to increase oil exports to Ceyhan port in Turkey to one million barrels of oil per day.”
The Kurdistan Regional Government, KRG, started independently exporting oil three months after the Iraqi Federal Government halted the provision of the agreed 17 percent share of Kurdistan Region from Iraq's federal budget in February 2014. This marked the start of a severe financial and economic crisis that was compounded a few months later by war with ISIS and the influx of close two million displaced who fled ISIS and took refuge in Kurdistan. All this was further aggravated by a dramatic fall in oil prices.
The arrangement with Rosneft will be implemented in three main stages that include exploration and production, oil purchase and refining. In keeping with standard practices, Rosneft will have five years to develop its five blocks and another 15 to 20 years of production to recoup its investment.
Answering to remarks made by some parliament members, Prime Minister Barzani informed that the agreement does not need to be approved by the Kurdistan Parliament as the Regional Oil and Gas Council is authorized by law to enter agreements with foreign oil companies.
Prime Minister Barzani also highlighted that the visit to the St. Petersburg International Economic Forum had great political significance.
The Kurdistan Region delegation, which also included KRG Deputy Prime Minister Qubad Talabani, held several meetings with Russian senior officials, including President Vladimir Putin, Foreign Minister Sergey Lavrov, and Energy Minister Alexander Novak.
Regional political developments, the fight against terrorism, strengthening bilateral relations, developing economic cooperation in various fields particularly energy, were the main topics discussed with Russian officials.