KRG-Russia deal will see crude oil sold directly to global refinery for first time

Taq Taq Oil Field Refinery Kurdistan Regional Government (KRG)

A new oil deal between the Kurdistan Regional Government (KRG) in northern Iraq and Russia’s biggest oil producer, Rosneft, will see the region selling oil to a major refinery directly for the first time.

Speaking to Kurdish news agency Rudaw, a KRG official said the three-year pre-financed was agreed to in December, but completed and finalised by the Russian oil company on Tuesday.

The deal was announced at the International Petroleum Week conference held in London but no details were given about the volume or monetary value due to commercial confidentiality, the source said.

Rosneft’s CEO Igor Sechin said his company was looking forward to developing new international markets for Kurdish crude oil.

The KRG has had problems with the central Iraqi government in the past for selling oil without Baghdad’s permission. Tensions resulted in Baghdad withholding a large portion of the KRG budget leading to a financial crisis in 2014.

Despite military co-operation in the fight against the Islamic State group (IS), especially in the Mosul operation, the parties have not reached an agreement in other areas, KRG Prime Minister Nechirvan Barzani, said recently.

On Monday Iran and Iraq signed a basic agreement that envisages exporting Iraqi oil through the Iranian territory – a scheme that would remove Baghdad’s reliance on the KRG to export its oil through a pipeline to Turkey.