Russian state oil firm Rosneft becomes first oil major to pre-finance Kurdish crude

LONDON: Russian state oil firm Rosneft has become the first major oil firm to prefinance crude exports from Iraq’s Kurdistan, joining trading houses in the race for crude from the semi-autonomous region.

“We look forward to developing new markets for Kurdish crude oil,” a statement by Rosneft quotes chief executive Igor Sechin as saying. The contract is due for 20172019, Rosneft said.

Sechin said Rosneft would be taking Kurdish barrels to the company’s growing refining system. In Europe, Rosneft owns a large refinery system in Germany.

Rosneft also said it was looking to cooperate with Kurdistan in upstream and logistics. Kurdistan’s natural resources minister Ashti Hawrami said the deal was opening up new possibilities for cooperation between Rosneft and Kurdistan.

Kurdistan has started independent crude exports from the central government in Baghdad in the past three years as it argued it was not getting its share of Iraq’s budget revenues and needed money to fund its war against IS.

But as oil prices crashed, the region had to borrow as much as $3 billion from trading houses such as Vitol, Petraco, Glencore and Trafigura as well as neighbouring Turkey, repayable by future crude sales.

Baghdad has first pledged to sue buyers of Kurdish oil as it insisted the central government was the only legal exporter of barrels both from southern and northern Iraq.

But Baghdad has lately softened its stance on the companies and traders working in Kurdistan with the barrels being sold in both Europe and Asia. — Reuters