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LONDON (Alliance News) - BP PLC and Rosneft Friday offered further details about their strategic relationship at the Saint Petersburg International Economic Forum, signing production, exploration and refining deals that strengthens the long-standing relationship between the two oil giants.
Political tensions between Russia and the West and the sanctions implemented against the country over its actions in Ukraine have not put BP off expanding in the country, and the company said it is committed to Russia and will continue to seek further opportunities.
According to a joint statement, final binding agreements were signed for Rosneft to sell a 20% share of Taas-Yuryakh Neftegazodobycha to BP, resulting in the creation of a new joint venture in East Siberia. The statement said the venture will develop the Srednebotuobinskoye oil and gas condensate field in eastern Siberia, which produces about 20,000 barrels per day.
According to Bloomberg Friday, BP will pay Rosneft around USD750 million for the 20% stake, whereas the Financial Times said the deal will be around USD700 million.
The new venture also will undertake the development of suitable infrastructure for further exploration and development of the region's reserves.
Igor Sechin, who chairs Rosneft's management board, said that Eastern Siberia is a priority area for Rosneft.
"Taas-Yuryakh Neftegazodobycha is carrying out a set of actions with the aim to further expand local infrastructure and boost production capacities. I'm glad that our cooperation with BP is developing in such a promising area," Sechin said in a statement.
David Campbell, president of BP Russia, said the deal deepens the two companies' relationship.
"BP will continue to seek attractive investment opportunities to develop Russia's substantial resources, whilst continuing to comply with international sanctions," Campbell said.
The two companies also agreed to jointly explore two "areas of mutual interest" in the West Siberian and Yenisey-Khatanga basins, which cover 260,000 square kilometres, alongside a further 115,000 square kilometre area related to the Srednebotuobinskoye field.
If studies under that agreement prove successful, the companies will establish new joint ventures to obtain licences and perform exploration activities, with Rosneft to own 51% of any such venture and BP to own the remainder.
Under that agreement, Rosneft and BP also will form a joint venture to carry out further appraisal work on the 2009 Rosneft-discovered Baikalovskiy field inside the Yenisey-Khatanga area of mutual interest.
"Exploration activities in the two areas of mutual interest will include screening studies, acquisition of seismic data, and drilling of exploration wells as new licences are added," the statement said.
Sechin and Campbell also signed a heads of terms to pursue the reorganisation of the German Ruhr Oel GmbH joint venture, envisaging a restructuring by dividing between the parties shares in four refineries and associated infrastructure.
The German Ruhr Oel GmbH joint venture holds stakes in four refineries in Germany, alongside stakes in five pipelines and marine crude oil terminals in the North, Baltic, Mediterranean and Adriatic Seas.
The planned deal will double Rosneft's stake in the Bayernoil refinery to 25% from 12.5%, in the MiRO refinery to 24% from 12%, and in the PCK Raffinerie to 37.5% from 18.75%.
At the same time, BP will take full ownership of the Gelsenkirchen refinery and the solvent production facility DHC Solvent Chemie.
"The restructuring of Ruhr Oel GmbH will enable Rosneft and BP to re-focus their refining and petrochemicals strategies in Germany," the statement said.
David Campbell said: "Our sole ownership of the Gelsenkirchen refinery will re-focus our refining business in the heart of Europe and is in line with our drive for greater simplification and efficiency."
BP shares were flat at 434.50 pence on Friday midday in London.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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