Russian state-owned oil giant Rosneft says it has signed a production-sharing agreement with Iraq’s autonomous Kurdistan region worth up to $400 million.
The October 18 announcement comes at a time of high tensions in the oil-rich Kurdish region after officials there last month held an independence referendum that the federal government in Baghdad has refused to recognize.
Rosneft said it would pay up to $400 million for 80 percent in the production-sharing deals for five oil blocks, although half of the amount could come in the form of crude oil pumped from the facilities.
Rosneft said a "conservative" estimate put recoverable oil reserves in the five blocks at some 670 million barrels.
The deal envisions a joint-exploration program and pilot production to begin next year. If all goes to plan, Rosneft said full development of the blocks would start in 2021.
On September 25, Iraqi Kurds voted overwhelmingly in an independence referendum to split from Baghdad, leading to an armed standoff between Kurdish and Iraqi troops.
On October 16 and 17, Iraqi troops retook without almost any resistance the northern oil-rich province of Kirkuk, which had been under Kurdish control since 2014.
Kirkuk Province, which lies outside the official Kurdistan region, is claimed by both Kurdish and Iraqi officials.
Russian President Vladimir Putin has said Moscow is not taking sides in the dispute between the Kurds and the government in Baghdad.
Based on reporting by AFP, Bloomberg, and TASS