The investment is expected to enable the region to become a key exporter of gas to Turkey and Europe over the coming years.
On the other hand, the deal will allow Rosneft to expand its presence in the region.
Rosneft said: “The Kurdistan Regional Government of Iraq and the Company intend further strengthen and develop cooperation and consider to expand Rosneft footprint in the region.
“The parties have negotiated Rosneft’s opportunity to participate in the project on funding of the construction project of Kurdistan Region’s natural gas pipeline infrastructure.”
The construction of the pipeline infrastructure is anticipated to see investments of more than $1bn, two sources close to the deal told Reuters.
Both the parties are expected to finalize a separate agreement for the project by the end of this year.
The Kurdistan Region gas pipeline will supply natural gas to the power plants and domestic factories throughout the region.
The pipeline is expected to have a capacity to export 30 billion cubic meters per annum (BCMA) of gas, besides facilitating gas supply to the key domestic users.
The investment in the pipeline will be made on a build, own, operate, transfer (BOOT) model.
While the commissioning of the pipeline and first domestic supplies are scheduled to take place in 2019, the export of gas through the pipeline is planned for 2020.
Rosneft said: “Successful implementation of the project under discussion will enable Rosneft to play a leading role in the building and expanding Kurdistan Region’s gas transport infrastructure and create synergy with existing projects for development of the oil and gas fields of the 5 blocks awarded to the Company in the region.”
Image: The investment in the pipeline will be made on a build, own, operate, transfer (BOOT) model. Photo courtesy of supakitmod/FreeDigitalPhotos.net.
