№ 11 (November 2010)
Rosneft, BP Form Strategic Alliance for Kara Sea
The Russian and British oil majors have agreed to explore and develop three license blocks in an area in the southern Kara Sea, roughly equivalent in size and prospectivity to the British sector of the North Sea. Russian Prime Minister Vladimir Putin told RIA Novosti on Friday that the government intends to create most favourable tax and administrative regime to development of the project.
By Barents Observer
The Kara Sea is east of Novaya Zemlya in the Russian Arctic, and the licenses in question cover an area of approximately 125,000 square kilometres.
The agreement is based on mutual shareholdings between the two companies. Rosneft will receive 5% of ordinary voting shares of BP in exchange for 9.5% of its shares, according to a press-release from Rosneft.
The shares are worth £5 billion (€5,9 billion) in each company.
BP says in their press-release the deal is an historic agreement that creates the first major equity-linked partnership between a Russian and a international oil company.
BP and Rosneft have also agreed to establish an Arctic technology centre, to be located in St. Petersburg, which will work with leading Russian and international research institutes, design bureaus and universities to develop technologies and engineering practices for the safe extraction of hydrocarbon resources from the Arctic shelf.
The technology centre will build on BP’s deep offshore experience and learnings with full emphasis on safety, environmental integrity and emergency spill response capability.
The Kara Sea, where BP and Rosneft will explore petroleum together, is ice-covered some 7-8 months a year.
The deal signed on Friday between BP and Rosneft is not only of concern for environmental groups. While the agreement is backed by both British Prime Minister David Cameron and Prime Minister Vladimir Putin, it has drawn anger among some American politicians.
Russian authorities are very pleased with the British oil major's participation on the Russian Arctic continental shelf.
Attending the signing ceremony, Russian Deputy Prime Minister Igor Sechin said, "International capital, and Russian companies are again willing to work to implement new large-scale investment projects world-class in Russia, and leading Russian companies accelerate their entry into the elite of the global energy industry".
Rosneft’s President, Eduard Khudainatov, says in a statement, "I am pleased that in just a few months we’ve significantly moved forward in implementing Russia’s offshore strategy. In its operations, our future joint venture will utilize the experience and expertise of BP, one of the leaders in the global oil and gas industry".