Rosneft and the Government of the Kurdish Autonomous Region of Iraq signed the documents required to put into force Production Sharing Agreements (PSA) with respect to five production blocks located in the Kurdish Autonomous Region.
The share of Rosneft Group Subsidiaries in PSA will be 80%, the amount of payments for the projects farm-in and geological information for each of five blocks ranges from 40 mln. USD to 110 mln. USD and may total to 400 mln.USD (incl. 200 mln.USD that can be compensated by oil produced from block), the heads of terms of the agreements and the basic principles of product distribution are similar to the PSA in Iraqi Kurdistan that were signed by other international oil and gas companies.
The parties agreed to implement the geological exploration program and to start pilot production as early as in 2018. In case of success, in 2021 it is planned to start full-field development of the blocks. According to conservative estimates, the total recoverable oil reserves at five blocks may be about 670 million barrels.
The documents were signed in pursuance of the Investment Agreement which was concluded at the St. Petersburg International Economic Forum in 2017.
Rosneft and the Kurdistan Regional Government signed a series of binding agreements at the XXI St. Petersburg International Economic Forum related to widening their cooperation in exploration and production of hydrocarbons, commerce and logistics.
The signed documents outlined the main terms of the project which provides for the establishment of a joint venture for the implementation of the long-term contract regarding the infrastructure project in Iraqi Kurdistan. Rosneft obtained access to the management of major regional transportation system with a throughput capacity of 700 thousand bbl per day, which is going to be expanded to level of 950 thousand bbl per day.
Also, the parties committed to put into effect the Production Sharing Agreements signed during the Forum with respect to the five blocks with substantial geological potential and outlined other perspective areas of cooperation in exploration and production, including the gas industry.
The signed documents have strengthened the cooperation between Rosneft and Iraqi Kurdistan, which started in February 2017 from signing a contract on crude purchase and sale in 2017-2019.
The new agreements will allow us to talk about full-fledged entry of the Company in one of the most promising regions of the developing global power market with the expected recoverable reserves in the order of 45 billion bbl of oil and 5.66 trillion m3 of gas (according to the estimate of the Ministry of Natural Resources of Kurdistan Region). The agreements provided for further phased investments by Rosneft in the Kurdistan region.