By OGJ editors
HOUSTON, June 22 -- BP PLC and TNK-BP have signed a memorandum of understanding with Russia's OAO Gazprom to jointly invest in major long-term energy projects or swap global assets, the companies said.
The move is "designed to extend Gazprom's access to international markets and deepen BP and TNK-BP involvement in Russian oil and gas," the firms said. The companies will establish a joint team to "identify strategic opportunities for investment both overseas and inside Russia," they said.
Initially, the joint company team will look for projects of at least $3 billion in cost, said BP Chief Executive Tony Hayward. Hayward said the companies would immediately set up a joint steering group to look for suitable investment options "across all geographies."
As part of the MOU agreement, TNK-BP has agreed to sell Gazprom its 62.89% stake in Rusia Petroleum OJSC, the company that holds the license for Kovykta gas field in Eastern Siberia. Kovykta field lies 450 km from Irkutsk in the north of the Irkutsk region. The field has estimated resources of 2 trillion cu m of gas in place, TNK-BP said.
Also based on the MOU, TNK-BP will sell its 50% interest in East Siberian Gas Co., which is building the regional gasification project. Gazprom has agreed to pay $700-900 million, subject to adjustments, for both sets of interests.
Gazprom and TNK-BP also agreed to a longer term "call" option for TNK-BP to purchase a 25% plus one share stake in Kovykta at an independently verified market price. This option could be exercized "once a joint investment or asset swap has been agreed under the terms of the MOU," the companies said.
Gazprom is Russia's largest company and the world's largest producer of natural gas. It holds about one quarter of total world gas reserves. Gazprom exports gas to 32 countries within and beyond the FSU. In 2005 the company sold 156.1 billion cubic metres of gas to European countries and with 76.6 billion cubic metres to the CIS and Baltic states.
TNK-BP, the third largest oil company in Russia, is owned and managed jointly by BP and Alfa Access Renova Group.