Rosneft, ExxonMobil reach milestones in strategic agreement

Rosneft and ExxonMobil Corp. said they achieved several milestones under their 2011 Strategic Cooperation Agreement, including joint venture formation for the Kara Sea and Black Sea projects.

The companies also established foundations for joint ventures to explore seven other licenses in the Russian Arctic and to manage the joint West Siberia tight oil project. The firms also plan to move into the next planning phase for an LNG development in the Russian Far East.

Rosneft and Exxonmobil outlined their progress to support implementation of the companies’ August 2011 long-term strategic cooperation agreement (OGJ Online, Aug. 30, 2011).

The Black Sea and Kara Sea joint venture operating companies, Tuapsemorneftegaz SARL and Karmorneftegaz SARL respectively, will commence project implementation activities as operator pursuant to agreement with Rosneft, which is the license holder. Rosneft holds 66.67% interest and ExxonMobil holds 33.33% interest in the two projects. The initial cost of exploration in the two areas is estimated at more than $3.2 billion, most of which ExxonMobil will finance.

During 2013, collection of data for both regions will continue with drilling operations expected to start in the Kara and Black seas in 2014.

In February, ExxonMobil and Rosneft announced plans to increase the scope of their strategic cooperation by adding seven new blocks in the Russian Arctic in the Chukchi Sea, Laptev Sea, and Kara Sea, spanning 600,000 sq km.

Rosneft and ExxonMobil reached agreements laying the foundation for joint venture entities for these areas. Data acquisition is being planned for these blocks.

The license obligations stipulate that 14 exploration and appraisal wells will be drilled and a significant amount of 2D and 3D seismic will be conducted over 10 years.

Agreements are also in place establishing the foundation for a new joint venture for a tight oil pilot project in West Siberia, where data collection operations are under way. Rosneft will hold 51% interest and ExxonMobil will hold 49% interest in this project.

The company also have an agreement in place identifying further steps for the development of an LNG plant in the Russian Far East.

By yearend the parties will undertake work to determine an LNG plant site, gas liquefaction technologies, and commercial structure of the project. Once this work is finalized, the parties plan to progress engineering definition.

Previously Rosneft and ExxonMobil signed agreements regarding the creation of the Arctic Research Center (OGJ Online, June 15, 2013).

ExxonMobil will provide $200 million for the center’s initial research phase. Rosneft and ExxonMobil equally will fund the next $250 million Rosneft holds 66.67% of the center and ExxonMobil 33.33%.

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