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Rosneft and BP have finalized a joint venture for hydrocarbon exploration in northeastern and western Siberia that was signed in June this year. The company, named Yermak Neftegaz, is 51-percent owned by Rosneft and 49-percent by BP, and will focus on two so-called areas of mutual interest (AMIs) spanning 260,000 sq km.
BP will fund the venture with US$300 million to be paid in two tranches. Its official commitment to supply the money marked the finalization of the deal. Russian economic daily Kommersant noted in a June report of the JV plans that this was the minimum investment these projects would need, as estimated by Rosneft’s head, Igor Sechin.
Rosneft’s contribution will take the shape of exploration and production licenses and “operational experience”, as BP put it, in the two AMIs: West Siberia and the Yenisey-Khatanga basin in northeastern Siberia.
Work on the Yermak Neftegaz projects will begin this winter, with appraisal-well drilling at the Baikalovskiy field in the Yenisey-Khatanga basin. The joint venture will also carry out a seismic survey of another field, Zapadno-Yarudeyskoye in West Siberia, and will initiate geological exploration at two other license plots in West Siberia.
As UPI notes, BP has had mixed fortunes in Russia. The Britain-based company, which has been present in the country for over two decades, is the only foreign shareholder in Rosneft, with an almost 20-percent stake. It was also co-owner of TNK-BP, a joint venture with a consortium of local tycoons that was headed by BP’s current CEO Bob Dudley.
The joint venture came to an end after a falling out between the partners, with Dudley fleeing the country in 2008, saying he was harassed. While the Russian partners of TNK-BP claimed Dudley was managing the company as a unit of BP, BP, for its part, expressed worry that those same Russian partners were getting uncomfortably influential in the company.
Eventually, BP sold its 50-percent TNK-BP holding to Rosneft in exchange for acquiring a stake in the state company.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.