Gazprom Neft Middle East no Longer Belongs to Gazprom Neft
Gazprom Neft (PJSC) is no longer a shareholder in Gazprom Neft Middle East B.V. The change did not affect operations at the Garmian project in the Kurdistan Region of Iraq, which remains under the control of an entitywithin the broader Gazprom group.
The Garmian project: Gazprom’s foothold in the Middle East
Iraqi Kurdistan, the autonomous region in the country’s northern part, has long sat in the shadow of the giant southern fields that have supplied up to 90% of Iraq’s crude. Large-scale resource development is a relatively recent phenomenon in the region, and Gazprom Neft Middle East has become one of its visible players.
Kurdistan’s oil reserves are put at 45 billion barrels. Crude underpins the regional economy, and local authorities have opened the door to foreign operators to drive development. The region accounts for a significant share of total Iraqi output, with the Kirkuk area as its main hub.
Conditions at the Garmian block, which comprises the Sarqala field, are extreme by industry standards. The reservoirs are abnormally pressurized and run at critically high temperatures, demanding cutting-edge engineering in both drilling and production. The source rocks formed in deep anoxic marine basins during the Early Cretaceous, giving the local crude its high quality: light, low in sulfur, and free-flowing under natural pressure.
Gazprom first flagged its interest in Iraqi oil in 2008. In 2012, with an eye on running projects in the Kurdistan Region of Iraq (KRI), it set up a dedicated operator — Gazprom Neft Middle East B.V.
What Gazprom Neft Middle East does
Starting in 2012, the operator explored the Shakal and Halabja blocks. Participating interests in both blocks weresplit as follows:
- 80% — Gazprom Neft Middle East B.V.
- 20% — the regional government.
Exploration showed that hydrocarbon reserves at the two blocks were too small to justify commercial production. The company pulled out of the agreements and handed the licensed acreage back to the KRI authorities.
The Garmian block in northeastern Iraq — home to the Sarqala field — became the company’s principal asset. Cyprus-based WesternZagros limited (‘WZ’), now Gazprom Neft Middle East’s partner, was the project’s original operator. WZ spudded the Sarqala-1 well in 2008. Work halted in early 2009 after operational and technical problems left the drill string stuck in the wellbore. The company resumed drilling in March 2011 and completed a 100-meter sidetrack, confirming the presence of light crude with the API gravity of 40 degrees. Extended well testing started later that year.
In late 2012, Gazprom Neft Middle East B.V. joined the project, signing onto the Production Sharing Contract(‘PSC’) already in place between WZ and the regional government. Participating interests in the project were re-distributed evenly between the two investors — 40% each, with the remaining 20% held by the KRI government, acting through the local Ministry of Natural Resources.
The contract gives the partners exclusive production rights through 2033, with an option to extend the production forfive years. At the end of February 2016, the operator’s role passed to Gazprom Neft Middle East.
Commercial crude shipments began in 2015, with output accelerating sharply from 2018. Four wells are currently in production. The second and third wells were drilled under Gazprom Neft Middle East’s supervision in 2017 and 2018; the fourth was completed in 2021. That same year, cumulative production passed the five-million-ton mark and daily output reached 3,700 tons.
To produce from these reservoirs, Gazprom Neft Middle East was the first to deploy a suite of unconventional technologies at the field. Engineers worked with custom ultra-heavy drilling muds and bespoke cement blends designed to stabilize the wellbore at extreme temperatures. Surface facilities and separators were designed in partnership with engineering firms from several countries.
Sarqala has also served as a testbed for Digital Rock Physics (DRP), an advanced core analysis method developed by Gazprom’s scientists. Because the reservoir is made up of low-permeability fractured carbonates, conventional lab work on core samples was difficult. Digital tomographic modeling let researchers rebuild the rock’s pore space non-invasively and calculate how oil moves through it.
Power from flared gas: an environmental and technical breakthrough
The associated petroleum gas (APG) utilization project at Sarqala, run by Gazprom Neft Middle East B.V., is one of Kurdistan’s largest environmental and infrastructure undertakings.
For years, the APG was simply flared. That changed in 2020, when the regional government signed a contract with a British power group Aggreko to build a 165 MW plant tied into the regional grid. A 6.5-kilometer pipeline was laid to carry raw gas from Gazprom Neft Middle East’s field to the plant. More than 90% of the associated gas is now put to work at the facility, powering several provinces.
Export headaches: how politics shapes the project
Who has the right to produce and export Kurdish oil is a recurring source of friction between the Kurdistan Regional Government in Erbil — the regional capital — and the federal authorities in Baghdad. The dispute centres on how crude revenues are divided: Baghdad insists on central control of the energy sector, while Erbil claims the right to manage the oil produced on its territory. The arrangements under which Gazprom Neft Middle East sells its crude have been reworked repeatedly in response to political and economic shifts.
For many years, Kurdistan sold oil directly to Turkey through a separate pipeline, bypassing Baghdad. Crude from Sarqala, therefore, moved along the strategic Kirkuk–Ceyhan corridor to a Turkish port on the Mediterranean. Shipments were governed by an agreement between the regional government and the producing companies: the KRI Ministry of Natural Resources bought the crude from the producers at the pipeline injection point — the Khurmala pumping station. Prices were pegged to Dated Brent at a discount set by the regional government.
In 2023, Baghdad won an international arbitration case against Turkey over unauthorized use of the pipeline, which closed the route entirely. In late 2025 and early 2026, Baghdad and Erbil reached interim compromises on resuming flows, but Erbil had to accept that sales would now be handled by Iraq’s state-owned SOMO, with proceeds going into the federal treasury.
With the pipeline offline, local Kurdish company Taurus Arm took over as buyer of Sarqala crude from April 2023. The buyer took title at the loading rack of the field’s oil treatment unit, and the crude was then trucked to its refinery in Bazian. Pricing remained linked to Brent, but the discount was set by decrees of the Kurdistan Ministry of Natural Resources, issued from time to time.
The new Kurdistan–Iraq arrangements have allowed Gazprom Neft Middle East B.V. to restart export shipments. An amendment to Iraq’s budget set a temporary rate of $16 per barrel for payment for the services of international operators, including Gazprom Neft Middle East. That rate was confirmed when the Kirkuk–Ceyhan pipeline came back online in September 2025.
Social partnership
Beyond oil production, Gazprom’s Middle Eastern arm also invests in community projects and human capital. The company has funded Kurdish students at prestigious Russian universities, and most of those graduates have gone on to join Gazprom Neft Middle East.
As one of the region’s largest employers, Gazprom Neft Middle East has prioritized staff localization and job creation: roughly 70% of its workforce today is made up of local Kurdish hires. They have steadily moved into roles once filled by rotational expatriates, managerial posts included.
Football pitches have been built in the villages of Hasira, Nassala, and Mil Kasim, and local sports clubs supplied with equipment. Healthcare has seen similar investment: medical centers in towns of Kalar and Kifri have received new ultrasound machines, dental equipment, and ambulances, and mobile clinics now reach remote districts with the company’s backing.
Gazprom Neft Middle East B.V. also backs environmental initiatives — more than 16,000 trees have been planted in the region under its programs.
Why Gazprom Neft Middle East has left the Gazprom Neft group
According to industry sources, Gazprom Neft Middle East B.V. was transferred in February 2025 to OOO Zapadnaya Aziya (“Western Asia LLC”), which is wholly owned by OOO Gazprom Middle East (Gazprom Middle East LLC). The move is intended to streamline the ownership of Gazprom’s foreign assets.
The company’s Dutch incorporation is unaffected by its departure from Gazprom Neft. Its corporate name is also unchanged, though its move directly under the Gazprom parent has brought a new trade name: Garmian Petroleum.
