Gazprom Neft Makes Bold Kurdish Gas Proposal

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Russia's Gazprom Neft has offered to sell up to 500 million cubic feet per day of gas from Iraqi Kurdistan to Baghdad in what would be the first deal of its kind in Iraq, industry sources tell Energy Intelligence. • The proposal is highly preliminary and there is an elevated risk that it will not lead to a firm agreement. Gas has not previously been supplied from the autonomous region to the rest of the country. • Gazprom Neft's move comes amid a broader shake-up in Iraq's oil industry, with some new players poised to enter and some established producers looking to make an exit. • Two sources tell Energy Intelligence that the departing companies could include Russia's Lukoil -- a longtime investor in Iraq. Topkhana and Kurdamir Gas Blocks Long-running efforts to export gas from Iraqi Kurdistan to Turkey have failed to bear fruit, and foreign companies active in the region are increasingly viewing deliveries to the rest of Iraq as their best option for monetizing Kurdish gas. Gazprom Neft chairman, Alexander Dyukov, has now proposed supplying gas from the Topkhana and Kurdamir Blocks. He did so during a recent visit to Baghdad by a Russian delegation headed by Deputy Prime Minister Yuri Borisov. Iraq's central government in Baghdad and the Kurdistan Regional Government (KRG) in Erbil have had a stormy relationship over the years and only recently reached an agreement on the country's 2021 budget (IOD Apr.1'21). The kind of gas project that Gazprom Neft has proposed would require a separate agreement between the KRG and Baghdad. Further complicating matters, Gazprom Neft does not currently hold a stake -- let alone operatorship -- in either Topkhana or Kurdamir, which are led respectively by Spain's Repsol (80%) and Canadian minnow Western Zagros (80%). Gazprom Neft did try to invest in the blocks back in 2017-18, but it's unclear if there have been any discussions since. Low Gas Price Proposed

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