Sector News

BP heads to Siberia with $300m Rosneft oil venture

June 20, 2016
News

BP has signed a deal with Russian-state backed oil explorer Rosneft to explore the oil and gas potential of Siberian fields through a new joint venture.

BP will own 49pc of the newly formed Yermak Neftegaz while Rosneft, which itself is 20pc BP-owned, will hold 51pc of the venture, which intends to explore Rosneft’s West Siberian and Yenisey-Khatanga basins.

While Rosneft will contribute its licence areas and operational experience in West Siberia and the Yenisey-Khatanga regions to the team-up, BP will contribute $300m in two installments to the project.

For BP it is the second high-profile joint venture in as many weeks. Last week it announced plans to merge its Norwegian business with Scandinavian explorer Det Norske in deal that will form Norway’s largest independent oil company.

The strategic tie-up is worth an estimated $6bn and will “unlock the long-term value” in the declining Norwegian continental shelf, according to BP’s chief executive Bob Dudley.

The latest deal was signed at the St Petersburg International Economic Forum on Friday by Rosneft boss Igor Sechin and David Campbell, the head of BP Russia.

Mr Sechin added: “These agreements serve as an example of full-scale co-operation with BP, Rosneft’s strategic partner and largest minority shareholder. We are now broadening the geography of our co-operation and creating a precedent which allows us to pursue co-operation in partnership with leading international companies to implement upstream projects at the largest Rosneft greenfield sites in West and East Siberia.”

Initial drilling will be undertaken by Rosneft subsidiaries, and is due to begin this winter.

Mr Campbell said the deal reinforced BP’s commitment to “strategic investment” in Russia.

The oil and gas-rich region is a key source of supply for European buyers. At the same summit Russian gas giant Gazprom said Europe would rely on Russia for record imports of natural gas this year as European gas production plunges following the crash in oil and gas prices.

Gazprom boss Alexei Miller said: “We are certain that Russian gas will be in demand in Europe for a long time.”

By Jillian Ambrose

Source: The Telegraph

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