Russia’s Gazprom Neft announced on Thursday its Middle Eastern subsidiary has inked two oil deals with Iraq’s autonomous Kurdish region, becoming the fourth major oil company to enter into agreements with Kurdistan.
The St. Petersburg-based company said it has acquired a 40% share in the 1,780 sq. kilometre Garmian block. WesternZagros company, a Canadian firm, will also hold a 40% share.
The Russian oil giant sealed another deal in which it will hold an 80% share in the 474 sq. kilometre Shakal block. The Kurdish Regional Government will hold a 20% share in each contract.
Both blocks are located in the southeastern part of the region and are expected to hold about 3.6 billion barrels of oil reserves. Gazprom’s up-front payment is said to be around $260 million.
“Gazprom Neft considers the territory of the Kurdistan Region of Iraq promising for further geological study and consequent production at the fields,’’ Vadim Yakovlev, First Deputy CEO, said.
An Iraqi Kurdistan official earlier this month admitted that Kurdistan Regional Government (KRG) has started pumping oil to Turkey without an explicit permission from Baghdad.
Baghdad insists oil and gas is the property of all Iraqis and it must be exported by, and its revenues go to, the federal government, which represents all Iraqis.
The latest Gazprom deal brings it to the league of foreign oil companies like France’s Total SA, US oil majors Chevron Corp. and Exxon Mobil Corp. who have already made their own forays into the Kurdish autonomous region.
Gazprom is already developing the 100 million barrel Badra field in central Iraq.
Foreign oil companies find it very lucrative to work directly with the Kurds who offer lucrative contracts allowing the developers to claim a share in reserves and the oil produced — unlike Baghdad which gives a flat fee for each of barrel of oil extracted.
The KRG also announced it will resume crude oil exports from the region in the first week of August after halting it in April over a payment row with the central government.
Authorities in Erbil said in a statement that exports will start at 100,000 barrels a day for a month as a ‘‘confidence-building’’ measure and if payments were forthcoming, they could move swiftly up to 200,000 bpd. It threatened to halt the exports if demands are not met by the Iraqi government once again.