Global oil majors BP and Russian state Rosneft sign long term deals totalling US$750 million, covering exploration, production and refining operations spanning Russia and Germany.
The deal signed Friday, by Rosneft Chief Executive Igor Sechin at the St. Petersburg International Economic Forum, cements an long held partnership between the two companies, that already includes BP holding a 20% stake in Russia’s majority state owned Rosneft.
Also at the same event, Igor Sechin signed further deals with anglo-dutch Royal Dutch Shell, in a bid to extend transportation pipelines across the German boarders.
The deal is being seen as a way for Rosneft to raise desperately needed capital, due to the sanctions imposed jointly by Europe and US administrations. The current sanctions prevent Rosneft from raising credit within either European or US boarders or accessing Western technology for tapping shale and arctic reserves. The sanctions do not prevent Rosneft from raising capital from asset sales or purchases. The US have gone further, taking out personal sanctions of the Rosneft CEO Igor Sechin.
BP’s Russia President David Campbell said, “BP will continue to seek attractive investment opportunities to develop Russia’s substantial resources, whilst continuing to comply with international sanctions,”
The agreement primarily covers operations within Russia, with BP getting a 20% stake in the Eastern Siberian venture Taas-Yuryakh Neftegazodobycha, with all future explorations within the associated 115,000km area being undertaken jointly.
Further to the Taas-Yuryakh Neftegazodobycha agreement, BP and Rosneft have committed to creating several joint ventures compering all aspects of the business.
Within exploration, joint ventures will be established to cover all exploratory activities within Yenisey-Khatanga basins and Western Siberia, with a combined area around 260,000km. The agreement states that both BP and Rosneft joint ventures will obtain licences and perform exploration activities, with the ownership structure of all ventures 51% Rosneft and 49% BP.
BP and Rosneft will form a further joint venture to continue work on Rosneft’s Baikalovskiy field discovery located in the Yenisey-Khatanga AMI. Through further exploration and appraisal work, it is hoped the discovery, made in 2009, will be proved commercially viable.
The deal sets to increase BP’s current stakes in joint ventures with Rosneft in refining. Ownership in German Ruhr Oel GmbH, will be reorganised, seeing BP doubling its current stake to 25%. In exchange the deal will see BP consolidate 100% of the equity of the Gelsenkirchen refinery and the solvent production facility DHC Solvent Chemie.
Last updated on 11:03AM - 25/06/15