In a statement, Rosneft said it would pay up to $400 million (340 million euros) for 80 percent in the venture as part of the deal with the Kurdish Autonomous Region of Iraq, although up to half the sum could be paid in crude oil from the blocks.
A joint exploration programme and pilot production is to start next year. If successful, Rosneft said it would start full-field development of the blocks in 2021.
Recoverable oil reserves at the five blocks are around 670 million barrels, Rosneft said, calling the estimate "conservative".
Rosneft and Iraqi Kurdistan are already cooperating on crude purchases and sales, but the new deal "will allow us to talk about full-fledged entry of the company in one of the most promising regions of the developing global power market", Rosneft said.
Last month, Iraqi Kurds overwhelmingly voted to break off from Baghdad, a decision that led to a standoff with Iraqi troops, and prompted fears for continued oil supplies from the region.
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