Rosneft pays a consultant $250 million to secure oil deals

26 March 2020 2 min. read

An external consultant has charged Russia’s state oil company $250 million for helping secure deals in Iraqi Kurdistan. The colossal fee makes the unnamed consultant one of the largest 'dealmakers' in the Middle East and North Africa consulting market by some distance.

According to research firm Coalition Development, the entire M&A advisory fees of the top 12 global investment banks in the Middle East and North Africa amounted to about $400 million last year. However, in a single transaction, one external consultant has picked up more than half that amount.

Newly released documents published by Bloomberg News state that Russia’s state oil company, Rosneft, paid an unnamed consultant an eye-watering $250 million for its services in securing a number of deals in Iraqi Kurdistan. The deals helped Rosneft become the dominant foreign player in the Kurdish oil industry, while President Vladimir Putin was seeking to bolster the Kremlin’s position in the Middle East at Washington’s expense.

Rosneft pays consultant millions to secure oil deals

As disclosed a few weeks ago in the financial statements of a Singaporean subsidiary created by Rosneft as a holding company for its Kurdish investments, the $250 million was paid over the course of 2017 and 2018 by the Russian oil company’s Swiss subsidiary, Rosneft Trading SA. The deals related to the sale of oil by the Kurdish Regional Government – which remains at loggerheads with Iraq’s leadership.

The $250 million was dated December 12 2019 in the financial statements of RN Middle East in Singapore, as audited by EY. In the accounts, the company said the fee was payable on the basis of “success,” while its size was relative to the value of Rosneft’s deals in Kurdistan.

In 2017, the Kurdish Government began looking to sell its oil independently of Baghdad, making the semi-autonomous region a magnet for some of the world’s largest oil traders. As oil revenues meant the region could depend less on Baghdad for funding, the Iraqi Government initially tried to block the sales with lawsuits to seize oil tankers.

A huge investment saw Rosneft advance as much as $3 billion to the Kurdish Regional Government in exchange for future oil supplies in 2017 – something which came shortly before Kurdistan attempted to gain independence from Iraq via an ill-fated referendum. Later, Rosneft agreed to convert $1.8 billion of its advances into a 60% stake in the oil pipeline that provides the only route for the company to export the region’s oil.

Kurdistan’s Natural Resources Minister Ashti Hawrami said in a statement at the time, “This deal represents a new beginning in our relationship with Rosneft and opens up the possibility of a broader relationship in all fields of energy cooperation.”