Gazprom Neft through its subsidiary Gazprom Neft Middle East B.V. has entered new hydrocarbon E&P projects in Iraq.

The company signed two production-sharing contracts (PSC) with the Kurdistan regional government of Iraq. The PSCs cover the Garmian and Shakal blocks in the south part of Iraq’s Kurdistan region.

Geological prospecting is now under way at the blocks. When completed, full field production should start no later than 2015.

Gazprom Neft shall get a 40% share in the Garmian block. Canadian WesternZagros, which is the other PSC participant with a 40% share, will remain the project operator until the start of the development period under the PSC. Gazprom also will get an 80% share in the Shakal block where the company will be the operator. The Kurdistan regional government carried interest in both contracts at 20%.

As appraised by Gazprom Neft, the resource potential of both blocks exceeds 3.6 Bboe.

Gazprom Neft’s cumulative project entrance payment, including reimbursement of past costs will amount to around US $260 million. The company’s share in geological prospecting costs on both projects is estimated at no less than $150 million up until 2015. The production-sharing framework provides for compensation of investor’s past costs after start of production at the fields.

“Taking into account the synergy that we can get from working on two adjacent blocks, Gazprom Neft considers the territory of the Kurdistan region of Iraq promising for further geological study and consequent production at the fields,” said Vadim Yakovlev, the company’s first deputy CEO. “Carrying out these projects will allow Gazprom Neft to increase its input in Iraq’s plans to boost oil production, to gain additional experience in this country and to expand its presence abroad.”