Russia's oil conglomerate Rosneft increases advance payment to Kurdistan to $2.1 billion

In 2017 Rosneft issued the Kurdistan government an advance of $2.1 billion (122 billion rubles at the official exchange rate at the time) as part of a contract to buy oil, the company stated in an annual report according to IFRS standards.

This is 60% more than was previously thought: in November 2017 Rosneft reported that it had given Kurdistan an advance of $1.3 billion for supplying oil.

In February 2017, Rosneft announced that it had signed a contract with Kurdistan’s government to buy and sell oil between 2017 and 2019. At that stage the transactions and amounts were not disclosed. Rosneft CEO Igor Sechin merely said that the contract with the Kurds would provide the raw materials for the company’s growing international network of oil refineries.

Kurdistan has in excess of $3 billion worth of contracts with Rosneft, of which $1 billion has already been received by the local authorities, head of the regional parliament’s finances and economics committee Izzat Saber told RIA Novosti at the end of 2017. According to him, the money was used to repay debt to the company Dana Gas from the UAE. “The second billion dollars will be invested in the construction of a pipeline to pump natural gas from Erbil to the Turkish port of Ceyhan. This has not yet been paid, and so work on it has not yet begun,” Saber commented at the time.

Rosneft has also reached an agreement with Kurdistan to develop five oil extraction units: Rosneft’s subsidiary companies are to pay $400 million for an 80% share in a project with at least 670 million  barrels of extractable oil reserves.

However, some sites were in the disputed territory in the region of Kirkuk, which fell under Iraq’s control in autumn 2017.

Iraq subsequently said that Rosneft’s agreements with Kurdistan were not valid, but that it would be prepared to reach a settlement with the Russian company. In February 2018, Iraqi Oil Minister Jabbar Alluaibi urged Rosneft to coordinate its operations with the British company BP, which has had the right to develop these sites since 2013. In this case, the ministry would not hinder Rosneft’s operations at the oil deposits in the Kirkuk province.

Iraqi Prime Minister Haider al-Abadi is willing to meet with Rosneft CEO Igor Sechin, RBC news agency reported on February 28, citing Iraqi Ambassador to Russia Haidar Hadi.

  Kurdistan, Rosneft, Russia