Russia plans to restart oil and gas operations in Iraq’s Kurdistan Region, a move entwined with broader geopolitical dynamics. Rosneft, Russia’s oil proxy, has significant investments and claims in the region. Concurrently, Western investments are rising in the KRI, aiming to reduce ties with adversarial influences. The KRI boasts substantial untapped oil and gas reserves, presenting potential for extensive resource development.
Russia is poised to resume its oil and gas operations in the Kurdistan Region of Iraq (KRI), as announced by Energy Minister Sergei Tsivilev. Until 2017, Russia’s significant energy investments in the KRI allowed for cost-effective oil and gas supplies, enhancing its geopolitical influence in the Middle East. The KRI’s situation, along with regional dynamics, shapes a complex geopolitical landscape for both Russia and China’s efforts in the area, particularly following the U.S.’s exit from the Iran nuclear deal in 2018.
Historically, Moscow has capitalized on the political instability in the KRI following the 2017 independence referendum where over 90% supported independence. In this period, Russia’s oil company Rosneft engaged in three strategic agreements, including a $1.5 billion financing deal and acquiring significant stakes in KRI oil blocks and pipeline ownership. These moves positioned Russia favorably to mediate discussions between the KRI and Iraq’s Federal Government (FGI) over budget and oil-related disputes.
Moscow has recently reinforced its demands regarding budget payments and oil flow resumption, linking these to Rosneft’s significant stake in the Kirkuk-Ceyhan pipeline. The Iraqi government’s initiatives appear to be stunted by their reluctance to facilitate independent oil sales from the KRI. Meanwhile, the KRI has responded to attacks on the existing pipeline by constructing its own route to support increased oil exports.
As Russia revives its operations, Western investors are showing renewed interest in the KRI, driven by the potential for energy independence from Russian and Iranian influences. This shift reflects a broader Western strategy to strengthen ties with the KRI, exemplified by BP’s recent $25 billion investment in oil fields. This investment framework aims to sever connections between the KRI and countries aligned with the Islamic Revolutionary Guards Corps.
The KRI holds substantial oil and gas reserves, initially estimated offshore and later revised upwards by the KRI government. The International Energy Agency notes that Iraq has only exploited a fraction of its recoverable oil resources, with significantly untested potential remaining. Current assessments also estimate the presence of at least 200 trillion cubic feet of natural gas reserves in the KRI, indicating a considerable resource base for future exploration.
The resumption of Russian oil and gas operations in the KRI highlights an intricate geopolitical and economic interplay in the region. Russia aims to exert influence amid rising Western interest and investment, while both factions seek to manage tensions over oil resources. The KRI’s untapped energy potential presents opportunities for both new and existing players in the oil market, setting a stage for future developments in Iraq’s energy sector.
Original Source: oilprice.com
