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Russia's Rosneft To Take Controlling Stake Of Iraqi Kurdish Oil Pipeline

Flammable gases burn from flares at the Havana oil field, west of the northern Iraqi city of Kirkuk, on October 17.
Flammable gases burn from flares at the Havana oil field, west of the northern Iraqi city of Kirkuk, on October 17.

Russia's state-owned Rosneft oil company says it has agreed with the government of Iraq's autonomous Kurdish region to take a controlling stake in the region's main oil export pipeline.

Rosneft said in an October 20 statement that it will own 60 percent of the pipeline while Iraq's private KAR Group will hold the remaining stake.

"The accession to the infrastructure project will boost the implementation of the company's strategic goals and help to increase the efficiency of oil supplies to consumers, including supplies of oil from [the Kurdish autonomous region] to Rosneft oil refineries in Germany," the company's statement said.

The agreement was signed by Rosneft CEO Igor Sechin and the Kurdish region's oil minister, Ashti Hawrami, on the sidelines of an industry conference in Italy on October 19.

Reuters quoted analysts as saying Rosneft was expected to invest about $1.8 billion into the project.

On October 18, the two sides agreed to production-sharing agreements to develop five new production blocks in the Kurdish region, with geologic exploration set to begin in 2018.

Rosneft said full development could begin by 2021 and that the estimated oil reserves of the five blocks was about 670 million barrels.

The deals come amid tension between Iraq’s Kurdish autonomous region and the central government in Baghdad following the Kurdish region's September 25 independence referendum – when voters in the autonomous region and disputed Kurdish-held areas largely supported secession.

Since the referendum, Iraqi government troops and allied Shi’ite militia fighters have moved into disputed areas in northern Iraq that previously were held by Kurdish Peshmerga fighters, including the city of Kirkuk, nearby oil fields, and strategic infrastructure sites in the provinces of Nineveh and Diyala.

The Kurdish region's oil exports have fallen to about 200,000 barrels per day -- compared to about 600,000 per day -- since the Iraqi military seized control of the oil-rich Kirkuk region.

Prime Minister Haidar al-Abadi says the Iraqi government's military operations are necessary to “protect the unity” of Iraq.

But on October 20, government troops clashed with Kurdish Peshmerga fighter in northern Kirkuk Province on a key highway about 50 kilometers south of the Kurdish region’s capital, Irbil.

Diplomats in Moscow have expressed sympathy for the Kurdish independence bid.

Sechin on October 19 urged Baghdad and the Kurdish region to resolve the dispute diplomatically.

Earlier, Rosneft lent the Kurdish region $1.2 billion to cover its budget deficit.

With reporting by Reuters and TASS
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