KRG Ministry of Natural Resources

Erbil, Kurdistan Region – Iraq (mnr.krg.org) – The Kurdistan Regional Government (KRG) and Russia’s oil major Rosneft have decided to extend the scope of the previously signed Investment Agreement to include the construction of a natural gas pipeline to supply power plants and factories in the Kurdistan Region and provide significant volumes of natural gas for export to international markets such as Turkey and the European Union.  

It is expected that the agreement will be finalized by the end of 2017 and Rosneft will fund and build the gas pipeline on a BOOT basis (build-own-operate-transfer) and long-term tariff payments. The capacity of the gas pipeline is expected to be up to 30 billion cubic metres (bcm) of gas per year, equivalent to 6 percent of Europe’s total gas demand. The pipeline will be built by 2019 for domestic use and supply, and gas exports are expected to begin in 2020.

The gas pipeline plans are part of a series of agreements signed by the KRG and Rosneft in St. Petersburg in June 2017, to increase investment in the KRG’s oil and gas infrastructure. Rosneft and the KRG are close to finalizing the financing for expanding the capacity of the Kurdistan Region’s crude oil pipeline, which supplies export to the port of Ceyhan in Turkey. This will also be on a long-term tariff arrangement.

The energy agreements also include cooperation in the entire hydrocarbons production chain, from exploration and production to commerce and logistics, and will help the Kurdistan Region to further develop its oil and gas industry.

Dr. Ashti Hawrami, the KRG’s Minister of Natural Resources, said, “The KRG’s gas pipeline agreement with Rosneft, a major international company, will speed up development of our gas sector, providing gas for our domestic needs and then export, adding a new source of income to support our economic diversification and help the reconstruction of some of the Kurdistan Region’s neighbouring areas that have been newly liberated from IS. Importantly, the pipeline will be built on a fast-track basis and accelerate delivery of export gas to the Turkish market and to the European Union. The revenue generated will benefit the people of Kurdistan and Iraq.”