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Transcript: Is Rosneft’s decision to invest in Kurdistan under current circumstances realistic?
Firstly, Rosneft already has investment interest in the Kurdish region of Iraq: it has a two-year crude prepayment deal with the Kurdistan Regional Government (KRG) and takes Kurdish crude to its refineries in Germany.
But also what is important to remember is that Rosneft has announced investment in Kurdish infrastructure at what could be described as quite strategic times. It put out a statement before the referendum when the KRG was seeing strong opposition from governments in neighbouring countries, the US, the EU as well as from Baghdad. And it could also be seen as giving the Kurdistan region some political backing at a time where Baghdad said it would take legal action against international oil firms striking independent agreements with governments outside of federal Iraq, which would include the provincial government in Erbil.
Rosneft could be seen to be in a strategic position as a state-owned Russian firm. Russia’s state-controlled Gazpromneft and private-sector firm Lukoil operate in federal Iraq. This also places Russia in an interesting position strategically between Erbil and Baghdad.
Other international oil firms have a stake in Rosneft including BP, which holds around 20pc. Interestingly, the oil ministry in Baghdad has asked BP to develop the fields in Kirkuk, on top of its operations at the Rumaila field in the south.
Consequently, from a strategic point of view, Rosneft could be well-placed for investment risks which may arise going forward.
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