ENERGY > Russia enters ‘Big Game’ on northern Iraq oil pitch


A Gazprom subsidiary becomes the fourth company to announce oil search deals with the Kurdistan Regional Goverment in the north of country despite a growing opposition by the central government in Baghdad

Print Page Send to friend »
Russia’s Putin (R) meets British PM Cameron
for ‘judo diplomacy’ in London. REUTERS photo

Russia’s Putin (R) meets British PM Cameron for ‘judo diplomacy’ in London. REUTERS photo

Middle East subsidiary of Russia’s Gazprom Neft has inked two oil deals with the Kurdistan Regional Government (KRG), becoming the fourth major oil company to enter into agreements with Iraqi Kurds that bypass the central government in Baghdad.

The Arbil administration in the north and the central government are at loggerheads over rights to develop resources. Baghdad wants to manage its energy resources nationwide, but Kurds insist the constitution doesn’t require them to go through Baghdad.

Tens of deals

Since the 2003 U.S.-led invasion, Arbil have signed scores of oil deals with small and mid-sized oil companies. But the entry of the oil majors may be a game changer that could lead to de facto policies the Kurdish side have long sought.

Turkey’s Genel Energy, a multi-national venture trading on the London bourse, is among the large players there. Baghdad is also at odds with Ankara because of Turkey’s direct oil purchases from Arbil.

In a statement issued on Aug. 1, the St. Petersburg-based company said it has acquired a 40 percent share in the 1,780-square-kilometer Garmian block. The Canada-based WesternZagros company will also hold a 40 percent share.

 In the second deal, the company will hold an 80 percent share in the 474-square-kilometer Shakal block. The KRG will hold a 20 percent 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 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,” First Deputy CEO, Vadim Yakovlev said.
With its latest deals, Gazprom has joined France’s Total, U.S. oil majors Chevron Corp. and Exxon Mobil who have already made their own forays into the region.

Iraq’s post-invasion governments have until recently blacklisted energy companies that signed contracts with the Kurdish government to prevent them from working elsewhere in the country or purchase crude oil.

But in the case of Exxon Mobil, the Iraqi government has had a light hand. Baghdad prevented the U.S. company from taking part in Iraq’s fourth energy bidding round in May but has not touched its deal to develop the 8.6 billion West Qurna field near the southern city of Basra along with Royal Dutch Shell.

No moves have been made against Total, which has a share in a consortium led by China’s National Petroleum Corporation to develop the 4.945 billion barrel Halfaya field in the south. Gazprom is developing the 100 million barrel Badra field in central Iraq. Baghdad has so far only blacklisted Chevron, which has no deals with the government.

KRG to pump oil to  Baghdad

LONDON - Reuters

The Kurdistan Regional Gorvenment (KRG) said on Aug. 1 that it would restart exports this week in a bid to end the payments dispute with Baghdad.

However, the KRG plans to halt oil exports on Aug. 31 if the central government does not make all outstanding payments, which could mean the proposed increase in Iraq’s overall shipments to world markets will be brief. It says the central government has withheld payment of $1.5 billion.
The KRG Natural Resources Minister Ashti Hawrami made the statement giving the end-August deadline in a letter posted on the KRG’s website and addressed to oil companies DNO, Genel Energy and Kar Group.


PRINTER FRIENDLY Send to friend »


Notice on comments


8/3/2012 7:46:32 PM

Why such gloom and doom? Haters are doing the happy dance prematurily. An economically strong and peaceful entity in Northern Irak can only be welcome by Turkey. Prosperous people have a lot more to lose from military adventures and hosting terrorists. Best friend Northern Irak Kurds have is still Turkey and that will not change in the future, on the contrary. Turkey benefits a lot more than just being the ONLY free and secure outlet for their oil. Ask the Turkish businessmen flooding there.

two sides to every coin

8/3/2012 5:23:00 PM

Looks as though the Kurdistan Regional Government is becoming a powerful entity in its own right, some seriously big organisations are dealing with them directly and not going through the Iraq government. Look out Turkey this is something that should have been dealt with long ago, and will cause major problems in the near future.

MR Somalia

8/3/2012 1:53:34 PM

Now Kurds will get Russian arms. It looks like the Turks are in trouble. This is big problem for Turkey and we know this deal with benefit Greece, Armenia and Kurds, two Turkish enemies and one it has some disputes. I do not consider Kurds an enemy of Turks, they just want fair go. You violated Iraq's sovereignty and now it all back fired on your from every direction.

V Tiger

8/3/2012 11:35:52 AM

Kurds are getting richer & might help their brothers in Turkey & Syria

Tayyar Abi

8/3/2012 11:04:33 AM

@Nikos T. Consider this; Certain powers in Turkey (and possibly American friends) wouldn't mind some old Ottoman borders back and consider the fact that that Arbil and surounding areas were to be retained by Republican Turkey as part of the post WWI settlement. Great Britain refused to withdraw from the area until Turkey finally gave up her legitimate claim just out of frustration. That claim may still be legitimate.

Nikos T.

8/3/2012 8:27:43 AM

Poor Putin, you should have asked the Turks first. :)

Eric Martin

8/3/2012 1:22:17 AM

Turkey needs to warn foreign countries that are doing deals that excursions by PKK which is being tolerated by local tribal clans will not be tolerated. There could be a wide buffer region involved. Turkey should be compensated with oil rich lands.
< >


AcerPro S.I.P.A HTML & CSS Agency