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Sanctions or no sanctions, BP, which is a 20-percent shareholder in Russia’s Rosneft, struck a new joint venture with its partner for the exploration and exploitation of gas deposits in the Yamal-Nenets autonomous region in northwestern Siberia.
In a statement, Rosneft said the two companies had agreed to jointly develop the reserves of two license blocks—Kharampursky and Festivalny—which hold a combined 880 billion cu m of natural gas.
Rosneft will have 51 percent in the joint venture and BP will have 49 percent. The deal now awaits relevant regulatory approvals.
It seems that there is no cause for sanction concern for BP: it will not in fact be violating U.S. sanctions against Russia, and specifically Rosneft. The sanctions specifically target Russia’s shale oil and gas resources, Reuters wrote in a story from this August, aiming to slow down Russia in the exploration of its shale oil and gas by cutting its access to Western shale extraction technology.
But BP and Rosneft’s joint venture will explore unconventional gas deposits, as Norway’s Statoil is doing in cooperation with Rosneft. U.S. sanctions target exclusively shale deposits that require hydraulic fracturing, while in Russia there are also other types of unconventional mineral resources, Reuters noted. In this case, these are deposits in limestone—a rock that’s deeper than shale but, like shale, requires hydraulic fracturing to release the oil and gas.
Interestingly, a Reuters review of Statoil news releases revealed that prior to the sanctions, first introduced in 2014, the company referred to its exploration activities in Russia as targeting shale oil and gas development. After the sanctions went into effect, shale was replaced with limestone in all company releases. What’s more, Statoil said it had cleared its exploration in Russia with the relevant Norwegian authorities.
For BP, this is the second joint venture with Rosneft, after last year the two agreed to develop West Siberian oil and gas through a company called Yermak Neftegaz. The value of the deal was estimated at US$6 billion at the time.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.