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Alexander Khurshudov: Kurdistan's oil reserves are a good subject for bargaining

October 26/ 15:44

Moscow. Russia has not received any inquires from other countries' governments concerning the cooperation between Iraqi Kurdistan and Russian companies, Alexander Novak, RF energy minister told journalists. Earlier, on 21 October Iraqi oil minister Jabbar al-Luabi said that he was expecting Rosneft to explain the situation with the contracts, as reported by Reuter agency.

Our reported interviewed ANGI expert Alexander Khurshudov on the subject:

- Alexander, Kurdistan has just voted for independence, there is still military action at its borders. Aren’t the risks too high for the Russian companies there?

- The risks are high indeed. Gazprom Neft has recently refrained from one of its Kurdish projects. They are small and are not connected to the infrastructure, but there are mine fields over the perspective areas and it’s uncertain when mine clearing will begin.  

- Perhaps it’s not worth for our oil companies to work there. There are a lot of safer places on the planet…

- I wouldn’t work there for sure. But I’m an expert, not a businessman. When it comes to business, risk is an inseparable part of the job. Besides, there are a few other oil provinces on the planet with 6 bln tons of proved reserves. So, one has to work in this region, just like in the others, but one has to be cautious.

- Rosneft has recently announced the creation of a joint venture with a Kurdish operating company for operation of an export oil pipeline to Turkey. Why did they decide to start with such an unusual project?

- Rosneft is working on other projects in Kurdistan, including the development of new fields, the construction of export gas pipeline. The most acute issue for Kurdistan is the increase of its export opportunities. Oil pipelines going west were in the area of military action, oil theft is common there. First of all the Kurds have to organize remote control over the pipe and ensure it safety. Russia has the required satellite systems, Rosneft has the experience in preventing theft. 

- However, there is a lot of opposition to the project… Who benefits from removing Kurdish oil from the market? Perhaps those who speculate for the rise of oil prices?

- No. Oil production in Kurdistan is not so high (0.5-0.6 mln bpd), and its change will hardly affect the oil price. However, the Americans had been developing a plan to divide Iraq into three parts even before its occupation started. Now they are supporting the Kurds not out of charity, but to gain control over the oil flows. I am sure that they are not in the least happy with the presence of Russia in the territory and they are trying to hinder it once again. It is hardly a coincidence that the statement of Iraqi government was immediately followed by the announcement of Chevron, the most loyal to American government oil company, about suspending their operation in Kurdistan.

- Can it be that the neighbouring Iran wants Kurdistan to export oil through the Southern Shiites regions of Iraq?

- It’s not impossible. Iran works closely with Bagdad and they wouldn’t mind all the oil flows going through Basra to the South. Though they can’t do it quickly, because first the pipelines have to be constructed and the terminals’ capacity increased. The Southern roads go to India and China, the Western ones to Europe; they are shorter and more economical. And it makes no sense to stand against economics. I think both Iran and Iraq are going to realize it soon enough.

- Iraqi authorities must be worrying that a stable oil export road will bring the Kurds closer to the independence they desire.

- I don’t think they need to worry about that. Rosneft strictly obeys the law and it wouldn’t bypass the country’s central government. If Iraqi legislation provides for approval with the centre, it will be done.

- What is this fighting around Kurdish oil all about then?

- It’s all about the fact the Kurdistan’s oil reserves are an excellent subject for bargaining. They can’t be developed without participation of Iraq’s authorities and cooperation with the neighbouring countries. Sooner or later they will have to come to the negotiating table and find the solutions that would satisfy everyone.

I respect Kurds’ desire to crate their own state, but the way to it won’t be short. It will take them to restore all the war’s destructions, to overcome the hatred of the peoples, to broaden their cultural connections and develop autonomies. Russia will do everything in its power to help normalize the life in the area and develop friendly relationship with all the sides.

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