Rosneft’s commitment to pay in advance for crude oil from the Kurdish region of Iraq is about $1bn, according to two people with knowledge of the matter who asked not to named as the supply deal is private.
The Russian state-run producer’s trading arm will buy Kurdish oil from now until 2019, Rosneft said in February, without specifying how much crude it would take. At $1bn, Rosneft would account for about a third of the prepayment deals the Kurdish Regional Government negotiated with oil traders.
Rosneft’s press service didn’t immediately comment when contacted by phone on Thursday. An adviser to the KRG’s Natural Resources Minister Ashti Hawrami didn’t immediately respond to a call and e-mail seeking comment.
The KRG is selling oil in advance to help finance government spending, including the military campaign against Islamic State, during a period of relatively low oil prices. For Rosneft, the deal brings a guaranteed flow of crude into its expanding trading business and is another example of its expansion into the Middle East following deals in Libya and Egypt.
Rosneft chief executive officer Igor Sechin said in February that the company will be “developing new markets worldwide for Kurdish crude oil.” Rosneft hasn’t previously worked with the KRG, which in recent years has struggled to maintain payments to international producers shipping oil from the region.
Rosneft, Russia’s biggest oil producer, has long participated in prepayment deals with trading houses for its own output. The company’s 25-year deal to supply oil to China National Petroleum Corp has also yielded billions of dollars of advance payments.
Workers stand next to a logo of Russia’s Rosneft oil company at the central processing facility of the Rosneft-owned Priobskoye oil field outside the West Siberian city of Nefteyugansk, Russia (file). The Russian state-run producer’s trading arm will buy Kurdish oil from now until 2019, Rosneft said in February.