BP inks major deal with Rosneft
17 Jan 2011
London – BP and Rosneft have agreed to explore and develop three license blocks - EPNZ 1,2,3 - on the Russian Arctic continental shelf.
These licences were awarded to Rosneft in 2010 and cover an area of about 125,000 square km in the South Kara Sea – an area roughly equivalent in size and prospectivity to the UK North Sea.
Under an agreement, Rosneft will hold 5% of BP’s ordinary voting shares in exchange for 9.5% of Rosneft’s shares.
The aggregate value of the shares in BP to be issued to Rosneft is around $7.8bn. The deal is subject to certain listing approvals and the completion of certain administrative requirements and is expected to complete within a few weeks, BP said.
BP and Rosneft are to establish an Arctic technology centre in Russia which will work with leading Russian and international research institutes, design bureaus and universities to develop technologies and engineering practices for the safe extraction of hydrocarbon resources from the Arctic shelf.
Rosneft and BP have also agreed to continue their joint technical studies in the Russian Arctic to assess hydrocarbon prospectivity in areas beyond the Kara Sea.
The parties will also seek additional opportunities for international collaboration beyond their 50/50 joint venture partnership in Ruhr Oel GmbH, a refining joint venture in Germany (subject to completion of Rosneft’s recent purchase of 50 per cent of Ruhr Oel from PDVSA).
BP’s chief executive, Bob Dudley, said: “This unique agreement underlines our long-term, strategic and deepening links with the world’s largest hydrocarbon-producing nation. We are very pleased to be joining Russia’s leading oil company to jointly explore some of the most promising parts of the Russian Arctic, one of the world’s last remaining unexplored basins.”
Rosneft president, Eduard Khudainatov, said: “In its operations, our future joint venture will utilize the experience and expertise of BP … This project is unique in its complexity and scale both for Russia and the global oil and gas industry. We see it as the next step in developing our relations with BP.”
Rosneft is Russia’s leading oil producing company, producing some 2.4 million barrels of oil equivalent (boe) per day, and has reserves of 15,146 billion boe. It produces oil in all key regions of Russia.
Rosneft reported pre-tax profits for the year end 31 Dec 2009 of $8,519m and gross assets, as at 30 Sept 2010, of $87,984m.
