Russia's oil giant Rosneft expects to receive the first crude oil cargo of 600,000 barrels from the Kurdistan Regional Government later this week, a Rosneft representative told TASS news agency on Thursday.
The crude will be shipped to the Italian port of Trieste and then delivered to Rosneft refineries in Germany via the Transalpine Pipeline (TAL) that connects the Port of Trieste with the German states of Bavaria and Baden-Wuerttemberg.
Rosneft will refine Kurdistan's next shipments of crude oil in India, the Rosneft representative told TASS, adding that the Russian company believes that Kurdish oil will help it to diversify sources of crude and hedge against possible force majeure circumstances.
In February, Rosneft and the Kurdistan Regional Government (KRG) signed a cooperation agreement in upstream, infrastructure, logistics, and trading, as well as a pre-financed crude oil purchase and sale contract of Kurdistan crude for the period 2017-2019. Rosneft's trading arm, Rosneft Trading SA, will be the buyer of the Kurdish oil, but the Russian company did not specify the sum of the deal.
Kurdistan has recently negotiated deals with Rosneft and with trading houses to secure $3 billion in loans that would be repaid with future oil sales, the region's natural sources minister Ashti Hawrami said in February.
The semi-autonomous region of Kurdistan, which has been suffering from the oil price slump and fallout with the central government in Baghdad, needs a steady stream of money to pay to the international oil companies and to fight the Islamic State.
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Rosneft, for its part, needs in Europe more of light crude oil for the German refineries in which it holds stakes, after Rosneft and BP announced late last year the completion of the deal to dissolve their refining and petrochemical joint venture Ruhr Oel GmbH (ROG) in Germany with effect from January 1, 2017. Under the deal that expired, BP supplied all light crude to the Ruhr Oel venture. Following the end of the deal, Rosneft saw its stakes in the Bayernoil, MiRO, and PCK refineries increase, while BP became the sole owner of the Gelsenkirchen refinery and the solvents production facility DHC Solvent Chemie.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More