Erbil received a major boost this month when Russian state-owned oil giant Rosneft signed a series of agreements with the Kurdish Regional Government (KRG) to widen their cooperation in the energy sector. Crucially, this deal — agreed on the sidelines of the St Petersburg International Economic Forum — will see Rosneft explore and develop five oil fields in the Kurdish region.

It comes on the back of the February 2017 deal signed between Rosneft and the Kurdish authorities, under which the former’s trading arm agreed to buy crude from the KRG until 2019. This, in itself, was an important step for the KRG because it was the first time that the region had been able to sell directly to a government-linked oil company. As the KRG Prime Minister Nejervan Barzani explained, “We have been selling oil so far to oil dealers… This is the first time we sell oil to a company that has 50% of its shares belonging to a government. This company will take the oil to their refineries in Germany.”

This latest agreement, therefore, consolidates Russian interest in, and commitment to, the Kurdish region. At the signing ceremony, attended by Nejervan Barzani, his deputy Qubad Talabani, and Natural Resources Minister Ashti Hourami, Rosneft CEO Igor Sechin said that his company “is widening its cooperation with Iraqi Kurdistan across the whole production chain… The agreements are signed under conditions profitable for the company and set an example of well-weighed investments in one of the key Middle East regions, which will make it possible for the company to expand its exploration and production geography, provide feedstock for Rosneft’s growing refining network and to raise profitability of our international assets”.

According to a statement posted on Rosneft’s website, the agreements were intended to widen co-operation in “exploration and production of hydrocarbons, commerce and logistics”. They include the exploration and development of the five fields under production-sharing agreements (PSAs), which were selected by Rosneft from the 22 blocks that the Kurdish Natural Resources Ministry announced it was putting on offer in January.

This is an excerpt from an article in our monthly Iraq & Kurdistan Focus publication.