Rosneft said it has agreed with Kurdistan Regional Government to take a majority stake in oil pipelines in the autonomous region despite heightened tension and conflict after a referendum for independence last month.
Rosneft’s share in the pipeline will be 60 per cent, while KAR Group – the current pipeline operator will hold 40 per cent, the Russian oil and gas company said in a statement. The company did not disclose its investment in the project.
“The entry into the infrastructure project will contribute to achievement of Rosneft’s strategic objectives and will enable Rosneft to enhance the efficiency of oil transportation to the end customers including supplies to the company’s refineries in Germany,” said Rosneft chief executive Igor Sechin.
Rosneft will be investing in expanding Erbil’s independent pipeline, which Baghdad has targeted, hoping to boost its capacity by a third to 950,000 bpd.
Last week, Rosneft agreed to invest US$400 million in five oil production blocks in KRG days after clashes between Iraqi government and Kurdi troops which has seen Iraq recapture Kirkuk oilfields.
This is in addition to the $1.2 billion it had loaned to the region earlier this year to support budget spending.
Kurdish oil exports face the worst disruption in months and are running at only a third of capacity, threatening repayments to Rosneft and other major creditors, including top trading houses such as Glencore and Vitol.
Kurdistan has borrowed around $4 billion from Rosneft, traders and Turkey, guaranteed by future oil sales, according to a Reuters report.
As exports have dropped to around 200,000 barrels per day (bpd) this week from usual volumes of 600,000 bpd, traders have become jittery about the billions of dollars at stake.