UPDATE 1-Sanctioned Rosneft's Norway work goes ahead with Statoil

* Rosneft continue working with the West despite sanctions

* Drilling results to be analysed by the year-end (Adds detail, quote)

MOSCOW, Aug 18 (Reuters) - Kremlin-controlled Rosneft said it is working with Norway's Statoil tosearch for oil and gas off Norway, partnering a Western companydespite sanctions.

Rosneft and its head Igor Sechin were sanctioned by the Westover Moscow's involvement in Ukraine.

The European Union banned equipment and technology exportsfor new projects in deep water, Arctic or shale oil for oneyear, a measure with limited effect so far but more damaging ifextended for the longer term.

Norway, not a member of the EU, has joined the sanctions,which are not designed to halt joint projects but rather aim tostarve Rosneft of foreign financing and access to moderntechnology.

A subsidiary of sanctions-hit Rosneft won a 20 percentparticipating interest in four fields within the Norwegiancontinental shelf in the Barents Sea during a licensing roundlast year.

Rosneft said that the companies expect to analyse thedrilling results up until the end of this year.

The Arctic is seen as a leading source for future oil andgas production. Rosneft has also secured deals to jointly workwith ExxonMobil, ENI and Statoil to developRussian sections of the Arctic shelf.

"The start of these exploration operations marks animportant milestone in developing the cooperation betweenRosneft and Statoil," Rosneft said in a statement on Monday.

Earlier this month ExxonMobil began drilling in Russia'sArctic as part of the project with Rosneft

Rosneft also has an agreement with Norway's North AtlanticDrilling to drill for oil in Russian offshore Arctic.

Norway opened an offshore Arctic zone bordering Russia inthe eastern Barents Sea to oil and gas exploration last year.

The area, as big as Switzerland, is estimated to hold about1.9 billion barrels of oil equivalent, of which 15 percent isoil, according to the Norwegian Petroleum Directorate.

Russia, the world's top oil producer with a daily average ofaround 10.5 million barrels per day, is counting on newhydrocarbon resources, including those in Arctic, to at leastmaintain production, a cornerstone of its budget revenues. (Reporting by Katya Golubkova and Vladimir Soldatkin, editingby David Evans and William Hardy)