"Rosneft issue is already under discussions…. I hope that there is an intention from both sides to resolve the issue. Our relations with Russian are very strong and I don't think this issue will become an obstacle for our economic cooperation. There will be some discussions and hopefully they will lead to some solutions that make both sides happy," the diplomat said.

Iraqi Ambassador to Russia Haidar Hadi noted in an interview to Sputnik that the issue had been discussed at a high level.

"Last month there was an important meeting in Baghdad with the deputy energy minister of Russia, who visited Baghdad heading an official delegation. He met his counterpart in Baghdad. They discussed the issues of Rosneft. Also two months ago I was in Baghdad with [Russian Energy] Minister [Alexander] Novak. He discussed the issue with the Iraqi Oil Ministry," the ambassador said

The situation is unfortunate for Rosneft, since it bypassed the proper channels through the Iraqi government when it signed the contracts with Kurdistan, unlike Lukoil and Gazprom, the ambassador noted.

"We don't mind doing business in Kurdistan. Kurdistan is a part of Iraq but it has to be in accordance to the constitution. The Federal government is in charge of the whole country. Contracts such as oil contracts have to be signed with the Federal government… To my knowledge, Gazprom has projects in Kurdistan but they went through the Iraqi government," Hadi said.

Rosneft should renegotiate the contracts with Iraqi government, Hadi added.

"That would be the reasonable solution. That probably is the only solution to negotiate the issue with the Federal government, to find a solution with legal experts from both sides and go through the contract," the ambassador concluded.

Rosneft and the oil-rich region Iraqi Kurdistan have signed a number of agreements on cooperation in the sector of exploration and production of hydrocarbons. In October, the Russian company and Iraqi Kurdistan signed the documents necessary for the implementation of the Production Sharing Agreements (PSA) concerning five production blocs in the autonomous region. The sides also announced the launch of an infrastructure project in Iraqi Kurdistan.

On September 25, Iraqi Kurdistan held an independence referendum, with around 93 percent of the voters supporting secession from Iraq. Baghdad called the referendum illegal and refused to recognize its results. In response, Iraq imposed sanctions on the Kurdish regional government and launched a military operation in the territories disputed between Erbil and Baghdad, starting with the Kurdish-controlled, oil-rich province of Kirkuk.

The extension of Erbil's cooperation with foreign oil companies has been strongly criticized by Baghdad, which considers all deals not concluded by the central government illegitimate. In late October, Iraqi Oil Ministry spokesman Asem Jihad told Sputnik that the ministry had requested Rosneft to clarify its position on contracts with Iraqi Kurdistan. A spokesman for Rosneft replied that the company did not have to report to Baghdad regarding its decisions, while the company's CEO Igor Sechin stressed that the company complied with local laws.

In late January, Iraqi Cabinet Secretary General Mahdi Alaq told Sputnik that while Baghdad would not persecute Rosneft for its contracts with Iraqi Kurdistan, it also would not adhere to contracts signed with Erbil.

Reporter’s code: 50101