Russian oil and gas company Rosneft has inked deals with Norway's Statoil to form four new joint ventures to develop Russia's lucrative Arctic reserves.
The two companies will jointly explore oil and gas fields in Russia's untapped undersea reserves, potentially containing 100 billion tonnes of oil equivalent in fields in the Okhotsk and Barents Seas. Rosneft has already signed similar deals with ExxonMobil and Eni. It is part of the strategic deal with US energy major Exxon Mobil. India’s ONGC Videsh was also keen to get a foothold in the Arctic with Rosneft after Moscow proposed to lift all export duties for new projects in the Arctic shelf. As part of the deal with Exxon Mobil Rosneft has begun geological exploration in the Kara Sea one year ahead of schedule, with the work to run throught to October 2012. Rosneft and Statoil first agreed to team up to develop Russian oil and gas in May. Recently India’s ONGC Videsh Ltd also expressed interest in getting a foothold in the Arctic with Rosneft after Moscow proposed to lift all export duties for new projects in the Arctic shelf.The development of Arctic offshore deposits is vital for Rosneft to strengthen its position as the world's No.1 crude producer.The deal with Rosneft follows the setback with another Russia-linked venture – Russia's Shtokman offshore gas field, which Gazprom announced it was suspending this week due to high costs. Statoil has already written off around $345 million of investment and handed back its shares in that consortium.Rosneft will have 66% in each of the operating joint ventures in the Arctic, and Statoil's share will be 33%. Statoil will cover all the costs in the exploration phase, which includes an obligatory program of six wells to be drilled in 2016-2021."The terms of the deal with Statoil are similar to those between Rosneft and its other foreign partners. In every project foreign companies will get a 33.3% stake in turn for offering expertise in offshore drilling, and the opportunity to participate in non-Russian projects. Moreover, foreign oil firms will cover all the costs of the exploration phase allowing Rosneft to minimise risks in the project", says Yulya Voitovich of Investcafe.Full-capacity production is expected to kick off in 2020.