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Rosneft Said To Prepay About $1 Billion For Kurdistan Oil
Photographer: Safin Hamed/AFP via Getty Images
April 7th, 2017 | 08:46 AM | 847 views
KURDISTAN
Rosneft PJSC’s commitment to pay in advance for crude oil from the Kurdish region of Iraq is about $1 billion, 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 $1 billion, 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 comment on the payment size when contacted by phone. An adviser to the KRG’s Natural Resources Minister Ashti Hawrami didn’t immediately respond to a call and email 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.
Under the deal with the KRG, Rosneft will receive its first 600,000-barrel cargo this week at Trieste, Italy, from where the crude will be transported by pipeline to its minority-owned refineries in Germany for processing, according to an email from Rosneft. Kurdish crude suits the company’s refining needs in both Germany and India, said Rosneft, which could potentially source more oil from the region.
Refinery Stakes
Rosneft owns 24 percent of MiRO and 25 percent of BayernOil following the restructuring of a joint venture with BP Plc. The company is also in the process of acquiring a 49 percent stake in the Vadinar refinery in India from Essar Oil.
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.
Source:
courtesy of BLOOMBERG
by Stephen Bierman and Mohammed Sergie
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