Royal Dutch Shell and Gazprom Neft have agreed to create a joint venture that will be exploring and developing oil fields in the Yamal region in Russia, the oil arm of Russian gas giant Gazprom said on Thursday.
Shell and Gazprom Neft have signed the documents to create a 50/50 joint venture that will be managed on an equal basis by the partners in a rare move of an international oil major into Russia's oil sector, some of which has been subject to Western sanctions since the Russian annexation of Crimea in 2014.
The joint venture deal is expected to be finalized in late 2019 or early next year, pending all necessary corporate and regulatory approvals and once all legal preconditions have been met, Gazprom Neft said in a statement.
"As part of this new agreement we will be able to reveal the full potential of what is a major hydrocarbon cluster in Yamal, viably and efficiently. We will be investigating further opportunities for implementing projects with Shell in the future, including projects outside of Russia," said Alexander Dyukov, Chairman of the Management Board at Gazprom Neft.
Shell's chief executive officer, Ben van Beurden, also commented on the agreement, saying in Gazprom Neft's statement that "This is yet another milestone in our partnership with Gazprom Neft. Over the years, we have built a trusted and fruitful relationship."
Shell and Gazprom Neft have been working in Russia to develop the Salym group of oil fields.
Gazprom Neft plans to invest more in exploration and aims to boost oil production regardless of the ongoing OPEC+ production cuts.
In March this year, Gazprom Neft's Dyukov said that he did not think the production cut deal between Russia and OPEC would last long, and that the Russian company was not even considering the cuts in its long-term plans. Gazprom Neft said it had plans to maintain or even increase production after 2020.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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