Platts, Jan 27, 2011
Russia's state-run Rosneft and ExxonMobil Thursday [Jan 27] signed an agreement regarding joint development of oil and gas resources in the Russian sector of the Black Sea, with initial focus on oil exploration and production at the Tuapse Trough (or Tuapse Depression). [In waters off the Krasnodar region -- D.R.]
The exploration stage is estimated to cost $1 billion, with ExxonMobil to make initial investments.
The agreement, which was signed by Rosneft President Eduard Khudainatov and ExxonMobil Development Company President Neil Duffin within the framework of the World Economic Forum in Davos, envisages setting up a joint venture to explore and produce crude at the Tuapse Trough block, the two companies said in a joint statement.
"The agreement enables Rosneft and ExxonMobil to consider additional opportunities to expand Black Sea energy sector cooperation in areas such as additional exploration and production, crude oil sales to Rosneft's Tuapse refinery and other Black Sea markets, development of regional transportation infrastructure, and deepwater offshore technology research and development," the statements said.
Rosneft will own a 66.7% stake in the joint operating company, with ExxonMobil receiving the remaining 33.3%, a spokeswoman with ExxonMobil in Moscow said.
The final details of the arrangement will be confirmed by the end of the year, she said.
The promising Tuapse Trough block covers an area of 11,200 square kilometers [4,324-sq mi] and requires significant funds for exploration as it is located in deep waters, with a sea depth varying from 1,000 [3,281 feet] to 2,000 meters [6,562 feet], Rosneft has said previously.
The block's reserves are initially estimated at around 1 billion mt of oil equivalent, Russia's Itar-Tass news agency reported Sechin as saying.
"ExxonMobil technologies will effectively complement Rosneft's experience and resources," Igor Sechin, the chairman of Rosneft's board and Russia's deputy prime minister, was quoted by the statements as saying during the signing ceremony.
"Development of this area will become the springboard for full-scale Black Sea basin development, and this challenge will require coordinated efforts of many nations and companies in the region," Sechin said.
Rex Tillerson, chairman and chief executive of ExxonMobil, who attended the ceremony, said his company welcomed the opportunity to expand its activities with Rosneft for the benefit of Russian energy development.
"ExxonMobil will bring its technology, project execution capabilities and innovation to complement Rosneft's strengths and experience in the region," Tillerson was quoted as saying. "We will build on the successful relationship we have with Rosneft through the Sakhalin 1 project to help meet energy needs in Russia and the wider Black Sea area."
In turn, Khudainatov said: "Commencement of implementation of the second major contract with a leading international partner this year demonstrates Rosneft's capabilities and its management's focus on creating a global energy company capable of undertaking the most complex offshore projects."
On January 14, Rosneft and UK's BP announced a major strategic partnership that would include a share swap and the joint exploration of three blocks in the Russian Arctic. [See my post, including remarks, here -- D.R.] [...]
ExxonMobil and Rosneft are already partners in the offshore Sakhalin 1 production-sharing agreement in Russia's Far East. Exxon holds an operating 30% stake in the project, Japan's Sodeco holds 30%, with Rosneft and India's ONGC holding 20% each.
(ExxonMobil is Rosneft's second foreign partner on the Black Sea. In June 2010, Rosneft signed an agreement with Chevron Corp to jointly develop a West Black Sea license block, which includes the Val Shatskogo deposit near the port of Novorossiisk. Chevron assumed an obligation to raise $1 billion for geological exploration of the block. Rosneft bought the Val Shatskogo unit in 2007 after the government seized and auctioned off Yukos assets. Rosneft now is Russia's largest oil company -- D.R.)