Russian oil major Rosneft will invest in gas pipelines in Northern Iraq, expanding its commitment to the region to help it become a major exporter of gas to Turkey and Europe, according an official statement released by Rosneft on 18 September.
“Rosneft has completed its due diligence on infrastructure of the export oil pipeline in Northern Iraq and will shortly finalise the legally binding documents on oil pipeline project under the Investment Agreement signed at St. Petersburg International Economic Forum in June 2017” read the statement.
It went on to say that “The Kurdistan Regional Government of Iraq and the Company intend further strengthen and develop cooperation and consider to expand Rosneft footprint in the region. The parties have negotiated Rosneft’s opportunity to participate in the project on funding of the construction project of KRG Region’s natural gas pipeline infrastructure. It is expected that a separate agreement under this project will be finalized by year-end”.
Kurdish Regional Government (KRG) has been exporting oil independently from Baghdad since 2014 and Kremlin-controlled Rosneft joined the list of buyers this year, lending the region hundreds of millions of dollars in loans guaranteed by future oil sales.
Now Rosneft is widening its investments to gas by agreeing to fund a natural gas pipeline in Northern Iraq, Rosneft and the Kurdistan Regional Government (KRG) said this week. Sources claim the investments would amount to more than $1 billion.
For Rosneft, the world’s largest publicly listed oil company by production, the deal is a major boost to its international gas ambitions. Rosneft has long sought to challenge Gazprom, Russia’s gas export monopoly, in supplying gas to Europe.
The pipeline’s capacity is expected to handle up to 30 billion cubic meters (bcm) of gas exports a year, in addition to supplying domestic users. Kurdish Regional Government sits on some of the largest untapped gas deposits on Europe’s doorstep.
The volumes that Rosneft wants to help Kurdistan supply to export markets represent 6 percent of total European gas demand and one-sixth of current gas export volumes by Russia, by far the largest supplier of gas to Europe.
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