Russian oil company Rosneft has completed its due diligence on infrastructure of the export oil pipeline in Iraqi Kurdistan (‘KROP”) and will shortly finalise the legally binding documents on oil pipeline project under the Investment Agreement signed at St. Petersburg International Economic Forum in June 2017.
The Kurdistan Regional Government of Iraq and the Company intend further strengthen and develop cooperation and consider to expand Rosneft footprint in the region. The parties have negotiated Rosneft’s opportunity to participate in the project on funding of the construction project of Kurdistan Region’s natural gas pipeline infrastructure. It is expected that a separate agreement under this project will be finalized by year-end.
The Kurdistan Region gas pipeline will not only supply natural gas to the power plants and domestic factories throughout the region, but also enable exporting of substantial fuel volume to Turkey and European market in the coming years. The investment in the project will be on under a BOOT arrangement, to be recovered through tariff charges and an agreed rate of return basis. The pipeline capacity is expected to handle up to 30 BCMA for gas export, in addition to facilitating gas supply to the key domestic users.
Rosneft and Kurdistan Regional Government are negotiating implementation of the project for construction of gas pipeline system on a fast track basis. Commissioning of the pipeline and first domestic supplies are planned for 2019 and export supplies – 2020.
Successful implementation of the project under discussion will enable Rosneft to play a leading role in the building and expanding Kurdistan Region’s gas transport infrastructure and create synergy with existing projects for development of the oil and gas fields of the 5 blocks awarded to the Company in the region.
Sources close to the deal told Reuters that the investments would amount to more than $1 billion.
(Sources: Rosneft, Reuters)