Gasprom Neft puts Iraqi projects on ice

Gasprom Neft puts Iraqi projects on ice
Gazprom Neft, the oil arm of Russia's top natural gas producer Gazprom, has frozen two contracts for oil development in northern Iraq’s Kurdistan region, according to Iraqi Oil Minister Abdul Kareem Al-Luaibi.

Gazprom told Iraqi authorities in a letter that they suspended work on the deals with Kurdistan, the minister told International Oil Daily. However, the company’s spokeswoman declined to comment.

However, Russia’s oil major is still interested in Kurdistan crude, "Gazprom Neft is still working on these projects. The company keeps its interest in Kurdistan," a Gazprom Neft source told Reuters.

In August the company signed two production sharing contracts with the Kurdistan Regional Government directly avoiding Iraqi Oil Ministry approval. Under the terms, Gazprom Neft would get a 40% share in the Garmian block and Canada’s WesternZagros will have another 40% share. The second project for Gazprom Neft is an 80% share in the Shakal block where the company will be the operator. The Kurdistan Regional Government will keep a 20% stake in both projects.

Gazprom Neft was the third company after ExxonMobil and France's Total to ink deals with Kurdistan without the Iraqi Oil Ministry giving the go-ahead. Baghdad’s central government was angered by the plans of international companies to tap oil and gas in the semi-autonomous region, saying the agreements were illegal.

The Russian oil major is already developing the 300 million barrel Badra deposit near the Iranian border. It holds a 30% stake in the project, along with South Korea's Kogas with 22.5%, Malaysia's Petronas with 15% and Iraq's state-owned Oil Exploration Company with 25% in the project. Production is due to start by 2013 and reach 170,000 barrels per day by 2017.