ExxonMobil and Rosneft sign deal for joint development of Arctic and Black Sea resources

ExxonMobil and Rosneft sign deal for joint development of Arctic and Black Sea resources

2011-08-31 03:36:23 GMT+7 (ICT)

SOCHI, RUSSIA (BNO NEWS) -- U.S. energy giant Exxon Mobil and the Russian state-controlled oil company Rosneft have signed a deal for joint exploration and development of Arctic and Black sea hydrocarbon resources, the companies said on Tuesday.

The Strategic Cooperation Agreement was signed in the presence of Russian Prime Minister Vladimir Putin, Rosneft President Eduard Khudainatov and Exxon Mobil President Neil Duffin. It includes an estimated $3.2 billion to be spent funding exploration of the Tuapse License Block in the Black Sea and the East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea, located in the Arctic Ocean, north of Siberia.

According to the Russian news agency Ria Novosti, Rosneft will own 66.7 percent and Exxon Mobil 33.3 percent of a joint venture to develop the area. The blocks "are among the most promising and least explored offshore areas globally, with high potential for liquids and gas," Exxon Mobil said.

The deal will also provide Rosneft with an opportunity to gain equity interest in Exxon Mobil's North America exploration sites, such as deep-water Gulf of Mexico and tight oil fields in Texas.

The companies have also agreed to conduct a joint study to develop tight oil resources in Western Siberia and to create an Arctic Research and Design Center for Offshore Developments in Saint Petersburg, which will be staffed by both Rosneft and ExxonMobil employees.

Additionally, an exchange program for technical and management staff will be implemented which will bolster the relationships between the companies and enhance the personnel's career development.

"Today's agreement with Rosneft builds on our 15-year successful relationship in the Sakhalin-1 project," Exxon Mobil Development Company President Neil Duffin said. "Our technology, innovation and project execution capabilities will complement Rosneft's strengths and experience, especially in the area of understanding the future of Russian shelf development."

Meanwhile, Russian Deputy Prime Minister Igor Sechin, who also attended the signing, said the terms offered by Exxon Mobil were "significantly better" than those offered earlier by British oil company BP, as quoted by Ria Novosti.

In January, Rosneft and BP agreed on a $16 billion share swap and Arctic development deal. However, the agreement was blocked by a court injunction following legal action by the Alpha Access Renova (AAR) Consortium, which is BP's partner in the joint oil and gas venture TNK-BP.

AAR said the deal broke TNK-BP's 2008 shareholder agreement under which all energy projects had to be offered to TNK-BP first. Then, a Stockholm tribunal froze the deal and ordered BP to develop the project together with TNK-BP, but Rosneft refused saying it did not see AAR as a partner.

-- © BNO News All rights reserved 2011-08-31