Russian oil major Rosneft yesterday announced that it is to invest more than $1bn in the construction of a pipeline with an annual capacity of 30 bcm to transport natural gas from Iraqi Kurdistan to Europe via Turkey. The announcement comes less than a week before the authorities in the semi-autonomous region are due to hold a controversial referendum as they seek independence from Baghdad after years of disputes over budget revenues and, most pertinently, the sharing of oil exports.
Kurdistan has been exporting oil independently from the central government in Baghdad since 2014 – mainly with the help of mid-sized oil companies – but Rosneft joined the list of buyers this year and had already agreed to lend the semi-autonomous region hundreds of millions of dollars in loans guaranteed by future oil sales.
If its latest intervention is successful, the volume of gas transported by way of the new pipeline will meet 6% of current total European gas demand and propel Rosneft into the same league as Gazprom, whose Blue Stream and Nord Stream pipelines have a combined capacity of 71bcm; the deal therefore represents a major boost to the company’s international gas ambitions, but will not do much to allay EU fears of its over-dependence on Russia for its energy supplies.
The pipeline is expected to be operational for domestic supplies by 2019 and to start pumping gas for export in the following year.