Rosneft CEO: Exxon May Replace Chevron in Black Sea Project -Report

- Rosneft CEO: Exxon May Replace Chevron in Black Sea Project -Report

Tuesday, September 13, 2011
Dow Jones Newswires
MOSCOW
by Jacob Gronholt-Pedersen

Russian state oil company Rosneft is in talks with two companies, including Exxon Mobil, to replace Chevron as partner in the Black Sea offshore Val Shatsky field, the Interfax news agency reports Tuesday citing Rosneft Chief Executive Eduard Khudainatov.

Khudainatov also said that by the end of the year, Rosneft and Exxon Mobil will conclude drafting a plan to develop three Arctic fields in the Kara Sea. Exxon Mobil replaced BP as partner in the project two weeks ago.

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Exxon Mobil and Rosneft Team Up

- Exxon Mobil and Rosneft Team Up



Aug 30, 2011

Exxon Mobil (NYSE:XOM) and Rosneft teamed up with U.S. company ExxonMobil to develop Russian Arctic oil fields, that had eluded BP earlier this year.

Rustam Kazharov, a spokesman for Rosneft told the Associates Press the deal was signed Tuesday in the presence of Russia's Prime Minister Vladimar Putin.

Rosneft struck a deal with BP in January to jointly increase Russia's Arctic but the deal fell through after BP's Russian shareholders managed to block the deal.

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Rosneft and ExxonMobil Plan $3.2B Program in Black, Kara Seas

- Rosneft and ExxonMobil Plan $3.2B Program in Black, Kara Seas

Tuesday, August 30, 2011
ExxonMobil Corp.

Rosneft and ExxonMobil have executed a Strategic Cooperation Agreement under which the companies plan to undertake joint exploration and development of hydrocarbon resources in Russia, the United States and other countries throughout the world, and commence technology and expertise sharing activities.

The agreement, signed by Rosneft President Eduard Khudainatov and ExxonMobil Development Company President Neil Duffin in the presence of Russian Prime Minister Vladimir Putin, includes approximately US $3.2 billion to be spent funding exploration of East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea and the Tuapse License Block in the Black Sea, which are among the most promising and least explored offshore areas globally, with high potential for liquids and gas.

In the course of these projects, the companies will use global best practices to develop state-of-the-art safety and environmental protection systems.

The agreement also provides Rosneft with an opportunity to gain equity interest in a number of ExxonMobil's exploration opportunities in North America, including deep-water Gulf of Mexico and tight oil fields in Texas (USA), as well as additional opportunities in other countries. The companies have also agreed to conduct a joint study of developing tight oil resources in Western Siberia.

The companies will create an Arctic Research and Design Center for Offshore Developments in St. Petersburg, which will be staffed by Rosneft and ExxonMobil employees. The center will use proprietary ExxonMobil and Rosneft technology and will develop new technology to support the joint Arctic projects, including drilling, production and ice-class drilling platforms, as well as other Rosneft projects.

"We have a clear vision for Rosneft's strategic direction — building world-class expertise in offshore business and enhancing oil recovery," said Rosneft president Eduard Khudainatov, following the signing ceremony. "The partnership between Rosneft with its unique resource base, and the largest and one of the most highly capitalized companies in the world reflects our commitment to increasing capitalization of our business through application of best-in-class technology, innovative approach to business management, and enhancement of our staff potential. This venture comes as a result of many years of cooperation with ExxonMobil and brings Rosneft into large scale world-class projects, turning the company into a global energy leader."

ExxonMobil Development Company President Neil Duffin said: "Today's agreement with Rosneft builds on our 15-year successful relationship in the Sakhalin-1 project. 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."

Rex Tillerson, chairman and chief executive officer of Exxon Mobil Corporation, who attended the ceremony, said ExxonMobil will benefit Russian energy development by working closely with Rosneft.

"This large-scale partnership represents a significant strategic step by both companies," said Tillerson. "This agreement takes our relationship to a new level and will create substantial value for both companies."

The agreement provides for constructive dialogue with the Russian Federation government concerning creation of a fiscal regime based on global best practices.

Additionally Rosneft and ExxonMobil will implement a program of staff exchanges of technical and management employees which will help strengthen the relationships between the companies and provide valuable career development opportunities for personnel of both companies.

The East Prinovozemelskiy License Blocks have a total area of 126,000 square kilometers (30 million acres) in water depths ranging between 50 and 150 meters (165 feet and 500 feet). Tuapse Block in the Black Sea has the total area of 11,200 square kilometers (2.8 million acres) and water depths ranging from 1,000 to 2,000 meters (3,300 feet and 6,500 feet). Rosneft equity interest in both joint ventures will be 66.7 percent, while ExxonMobil will hold 33.3 percent.

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Rosneft Touts $2.83B in 2Q Earnings

- Rosneft Touts $2.83B in 2Q Earnings

Friday, July 29, 2011
Rosneft

Rosneft has published its consolidated financial results under US GAAP for 2Q and 1H 2011.

In 1H 2011, Rosneft's average crude oil output (including production by subsidiaries and share in production by affiliates) increased by 2.7% year-on-year, to 2,362 th. barrels per day. The increase reflects higher production at Vankor and Verkhnechonsk fields in Eastern Siberia and crude output growth at Sakhalin-1 project. The Company's average daily crude oil production reached 2,368 th. barrels in Q2 2011 and rose to a record of 2,400 th. barrels in July, which was made possible due to on-schedule capacity expansion of oil treatment unit at the Vankor field.

Petroleum product output by Rosneft was 13.4 mln tonnes in 2Q 2011, which is 20% higher year-on-year. The growth reflects acquisition of a 50% stake in Ruhl Oel GmbH, which owns stakes in four German refineries.

In 2Q 2011, Rosneft's revenues grew by more than 1.5 times year-on-year to USD 23.274B. The increase was primarily attributable to higher crude oil prices and growth of production and refinery throughput. In 1H 2011, revenues reached USD 43.397B, which is 44% higher compared with 1H 2010.

Rosneft's EBITDA amounted to USD 5.333B in 2Q 2011, which is an increase of 12% year-on-year. Tax burden rise, particularly due to abolition of a reduced duty for Vankor crude and introduction of increased export duty for naphta, put downward pressure on the figure. The increase was also tempered by real strengthening of the rouble against the USD, and higher transportation and electricity tariffs year-on-year. The above-mentioned negative impact was partially offset by tight cost control. Unit lifting costs increased by 4.4% quarter-on-quarter (to USD 3.1 per barrel) and unit refinery costs rose by 5.7% while real rouble appreciation was 6.2%. In 1H 2011, EBITDA grew by 30% year-on-year, to USD 11.986B.

In 2Q 2011, free cash flow amounted to USD 1.73B, up 8% year-on-year. As a result, in 1H 2011 the Company's free cash flow increased by 66% year-on-year, to USD 4.911B.

Commenting on the results, Rosneft's President Eduard Khudainatov said, "We posted good results for the second quarter, including record operating figures. We closed the deal on acquisition of a stake in German refineries, which resulted in insignificant net debt rise. EBITDA reduction quarter-on-quarter was anticipated following abolition of export duty for Vankor crude. Ongoing performance improvement, investment program implementation and higher shareholder returns are our priorities for the near future."

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Rosneft Discovers Additional Oil Deposits in Krasnodar Region

- Rosneft Discovers Additional Oil Deposits in Krasnodar Region

Monday, June 27, 2011
Rosneft

Rosneft geologists have discovered a new high-yield oil deposit in the western part of the Sladkovsko-Morozovsky oil and gas region of the Slavyansko-Temryuksky license field in the Krasnodar Region. Recoverable reserves are initially estimated at over 500,000 tons of oil.

The first well in development is Zapadno-Mechetskaya No. 4 at a depth of 3,525 meters. Preliminary results indicate that the deposit has significant potential. Expected well production could be between 220 and 350 tons of oil per day.

Rosneft has stepped up exploration work in the Krasnodar Region in line with management goals set out during the working visit of Rosneft President Eduard Khudainatov to the region in December 2010. The company is also developing a reserve replacement program in the southern regions of Russia in which it operates. The program will include deposits controlled by Krasnodarneftegaz, Stavropolneftegaz and Grozneftegaz, as well as deposits in Dagestan and Ingushetia. The program will run between 2012 and 2020.

One of Russia's oldest oil and gas provinces is located in the Krasnodar Region, where oil deposits have been developed since the end of the 19th century. The region has been well explored and is considered to have highly depleted deposits (85-87%) making it challenging to discover new deposits in the area.

In 2010 Krasnodarneftegaz extracted 950,000 tons of oil and gas condensate and 2.8 billion cubic meters of gas. Krasnodarneftegaz has proven reserves of 10.13 million tons of oil and 48.528 million cubic meters of gas.

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Rosneft VP Waves Goodbye

- Rosneft VP Waves Goodbye

Thursday, June 23, 2011
Rosneft

Peter O'Brien, vice president and head of the group of financial advisors to the president of OJSC Rosneft, has reached the end of his contract and will be leaving the company.

Over his time at the company (since 2006), Peter O'Brien has made a significant contribution to the development of a number of strategic areas. He supervised economic and planning issues, as well as long-term financing, investment and reporting to international standards.

Peter O'Brien's experience and authority in the investment community played an important role in preparations for and execution of Rosneft's successful IPO, which was highly regarded by Russian and international investors. Since its IPO, the company has achieved its financial targets and been effective in maintaining investor relations, both areas in which Peter O'Brien played a key role.

Before joining Rosneft, Peter O'Brien worked at Morgan Stanley between 2000 and 2006, where he led the CIS energy group and co-headed the investment banking division in Russia.

The Rosneft management would like to thank Peter O'Brien for his productive work at the company and wishes him further career success.

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Rosneft Sell-off Could Be Brought Forward to 2012 - Report

- Rosneft Sell-off Could Be Brought Forward to 2012 - Report

Monday, June 20, 2011
Dow Jones Newswires
LONDON
by London Bureau

Russia wants to hasten its planned privatization of state-owned oil giant Rosneft in the wake of the collapsed share swap deal with U.K. supermajor BP, the Guardian reports Monday, citing an interview with one of President Dmitry Medvedev's key economic advisers.

"We want Rosneft to be a normal commercial company," said Arkady Dvorkovich, according to the paper. "The original government proposals were to start [the share sale] in 2013 but maybe now will be brought forward to 2012," Dvorkovich said.

The Russian government was planning to sell more than 85% of its stake in the company in 2013 if BP had gone ahead as planned. Now ministers are looking at bringing this process forward a year, the newspaper reports, adding that state control in the firm could fall below 50%.

The government would be happy if BP bought shares in Rosneft, according to the Guardian.

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Rosneft CEO: Chevron to Exit Joint Black Sea Project

- Rosneft CEO: Chevron to Exit Joint Black Sea Project

Friday, June 10, 2011
Dow Jones Newswires
KRASNODAR (Dow Jones Newswires)
by Jacob Gronholt-Pedersen

Rosneft is seeking new partners for its Val Shatsky project in the Black Sea because Chevron is likely to leave the block, Eduard Khudainatov, the CEO of the Russian state-owned oil major, said Friday.

"We had some disagreements," said Khudainatov.

When asked whether Rosneft will develop the Val Shatsky block in the Black sea together with Chevron, Khudainatov said: "Obviously not."

"Chevron still wants to work with us on offshore projects. Now we're considering where we will work (together)," he said.

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Chevron Interested in Arctic Exploration Deal With Russia's Rosneft

- Chevron Interested in Arctic Exploration Deal With Russia's Rosneft



Jun 10, 2011

Shares of Chevron (NYSE:CVX) are down after OAO Rosneft Chief Executive Eduard Khudainatov told Bloomberg that the oil major is interested in working with his company off the Russian Arctic coast.

BP (NYSE:BP) had been in a similar deal with Rosneft until the deal fell apart earlier this year.

Chevron shares are down 1.34%, or $1.37, to $99.83.

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Shell CEO Cautious on Rosneft Arctic Talks - Report

- Shell CEO Cautious on Rosneft Arctic Talks - Report

Wednesday, June 01, 2011
Dow Jones Newswires

Shell Chief Executive Peter Voser said talks last week with Russian Deputy Prime Minister Igor Sechin about the possible joint exploration of Russia's Arctic shelf had looked at a "multitude of blocks" but that it was "too early to say where this will go," the Financial Times reports Wednesday.

Last week's meeting between Voser and Sechin, who oversees the oil and gas sector, came two days after Russian Energy Minister Sergei Shmatko said he doesn't expect state-controlled oil giant Rosneft and BP to revive their strategic alliance after it was blocked by BP's existing Russian partners, a group of Soviet-born billionaires known as AAR.

BP and Rosneft announced in January plans for a $16 billion share swap and joint development of three blocks in Russia's Arctic Sea. But AAR, arguing the pact violated the terms of its agreement with BP in their TNK-BP Ltd. joint venture, went to court in the U.K. to block the deal.

After months of talks, discussions broke down earlier this month.

While BP said last week it is still discussing the joint exploration of the Russian Arctic with Rosneft, Shell has expressed renewed interest in that region. However, the idea of a share swap with Rosneft isn't under consideration, the company told Dow Jones Newswires.

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BP, Rosneft Deal Unlikely to Be Revived, Russian Official Says - ADRs Down 2% in Afternoon Trading

- BP, Rosneft Deal Unlikely to Be Revived, Russian Official Says - ADRs Down 2% in Afternoon Trading



May 23, 2011

BP plc (BP) ADRs are down after Russian Energy Minister Sergei Shmatko said he doesn't see the arrangement between the british oil major and Russia's OAO Rosneft to come back, MarketWatch reported.

Some close to the deal had reportedly held out hope that the two parties would revive the deal for a $16 billion share swap and joint exploration and development of plots in the Arctic Sea.

BP ADRs are down 2%, or $0.91, to $44.09.

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BP's Arctic Deal With Rosneft Collapses

- BP's Arctic Deal With Rosneft Collapses



May 17, 2011

BP Plc's (NYSE:BP) disputed share swap and Arctic oil exploration agreement with Russian state-owned company Rosneft has collapsed, opening the door for Rosneft to find another company to fill the void.

The deal came apart because BP failed to first consult with its Russian partners in a separate joint venture, TNK-BP. The joint venture was founded in 2003 as a 50/50 split with the Alpha-Access-Renova Group and is Russia's third largest producer of oil.

The deadline to resolve the dispute passed Monday night at midnight, but BP said Tuesday it would continue discussions with both Rosneft and its TNK-BP partners about collaborating in the future.

Under the proposed deal, BP would have gained access to the Kara Sea, a region of the Arctic Ocean that is considered a new frontier in oil exploration. The deal was new CEO Robert W. Dudley's first big transaction and was party of his strategy to focus on BP's exploration capabilities in quickly growing countries like India and Russia.

Shares of BP are trading up 0.35% at $42.61.

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Rosneft Net Profit Up 58% at $3.94B, Beats Expectations

Rosneft Net Profit Up 58% at $3.94B, Beats Expectations

Friday, April 29, 2011
Dow Jones Newswires
by Jacob Gronholt-Pedersen

Rosneft said first-quarter net profit rose 58% from last year on higher oil prices and crude output as well as tax breaks on its Vankor field.

London-listed Rosneft said net profit under U.S. Generally Accepted Accounting Principles rose to $3.94 billion from $2.49 billion in the first quarter of 2010, above a forecast of $3.72 billion in a Dow Jones Newswires survey of eight analysts.

Revenue increased 36% to $20.12 billion from $14.76 billion a year earlier, boosted by a surge in global crude prices as well as higher output, helped by a ramp-up of production at the huge East Siberian Vankor field. Analysts had expected revenue of $20.3 billion.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 50% to $6.65 billion from $4.44 billion and were above analysts' expectation of $6.42 billion.

Rosneft said it produced 2.564 million barrels of oil equivalent per day during the quarter, and lowered net debt by 19% in the three months to $11.1 billion.

Lukoil to Begin Work with Rosneft in Caspian, Black Seas

Lukoil to Begin Work with Rosneft in Caspian, Black Seas

Monday, April 25, 2011
Dow Jones Newswires
by Jacob Gronholt-Pedersen

Russia's biggest private oil producer Lukoil and state oil champion Rosneft plan to begin joint exploration in the Black and Caspian Seas under a new long-term cooperation agreement, Lukoil Chief Executive Vagit Alekperov said Saturday, according to the government's website.

The two companies announced a deal to merge forces in offshore exploration last week.

"It's a step forward that today allows us to take on very complex projects, both technological and capital-intensive," Alekperov told Prime Minister Vladimir Putin during a meeting.

Alekperov said Lukoil and Rosneft are likely to begin their joint work on projects in the Caspian and Black Seas, and may also merge two projects in the Timan Pechora region, where Lukoil already has oil export infrastructure in place.

Black Sea

The agreement also envisions joint development of offshore fields in the Azov Sea and in Arctic waters, Alekperov said.

Alekperov didn't say when work would begin, but said the deal with Rosneftby Sept. 1.

Rosneft, Lukoil Agree to Joint Offshore-Exploration Deal

Rosneft, Lukoil Agree to Joint Offshore-Exploration Deal

Thursday, April 21, 2011
Dow Jones Newswires

Rosneft and the country's biggest private oil producer, Lukoil, on Thursday signed a long-term cooperation deal that includes offshore exploration in Russian Arctic waters.

The two companies agreed to work together on "geological exploration in the license areas of Rosneft on Russia's shelf and development of fields already discovered," Lukoil and Rosneft said in a joint statement.

BP, Rosneft Extend Deadline for Share Swap

BP, Rosneft Extend Deadline for Share Swap

Thursday, April 14, 2011
BP plc

BP has agreed with Rosneft to extend the deadline for completing the share swap agreement (previously announced on January 14) to May 16, 2011. The agreement between the two companies followed the April 8, decision of the arbitral tribunal to allow them to discuss extension of the deadline. This means that the share swap agreement will now not terminate on April 14, 2011.

The share swap agreement, between BP and Rosneft, together with the related Arctic Opportunity, were originally announced on January 14, 2011. Both the share swap agreement and the Arctic Opportunity remain subject to an interim injunction.

BP intends to continue with the arbitration process to obtain a final award on all outstanding issues, including whether or not the interim injunction should continue.

BP remains fully committed to TNK-BP as its primary business vehicle in Russia and fully supports its strategy and investment program, which should ensure its success for decades to come. BP also owns a 1.3% interest in Rosneft and has been exploring offshore Sakhalin for over a decade and engaging in Arctic studies.

BP Races to Save Deal With Rosneft

BP Races to Save Deal With Rosneft

Wednesday, April 13, 2011
The Wall Street Journal
by Guy Chazan & Gregory L. White

As a bruising fight between BP and some of Russia's most powerful oligarchs intensifies, BP is now weighing a previously unthinkable step to end the battle: possibly pulling out of its lucrative Russian joint venture with the oligarchs, TNK-BP.

BP is considering the move as part of its scramble to salvage a separate, proposed alliance with Russia's state oil company, Rosneft, before a crucial deadline for that deal -- which is opposed by its TNK-BP partners -- expires Thursday.

The U.K. oil company is considering a range of options to rescue the Rosneft partnership, some of which would have been inconceivable before the deal ran into trouble in February. One of them is to divest its 50% stake in TNK-BP, according to a person familiar with the matter.

Selling its half of a company that accounts for one quarter of BP's global oil-and-gas production and close to one-fifth of its reserves is seen as unlikely. But it is a sign of BP's desperation as the countdown begins to Thursday's deadline that it is even considering such an option.

In January, BP and Rosneft said they would swap shares in each other and jointly explore for oil and gas in the Russian Arctic, an area previously off limits to foreign oil companies, as part of a groundbreaking strategic partnership.

But BP's partners in TNK-BP, a consortium of Soviet-born billionaires collectively known as AAR, claimed the Rosneft deal violated their shareholder agreement, which stipulated that TNK-BP should be the main vehicle for both partners' investments in Russia. In February, AAR won a court injunction blocking the deal.

Last Friday a panel of independent arbitrators left the injunction in place until further notice but gave BP permission to seek to extend the April 14 deadline for the share swap.

The company is now pursuing a number of solutions to its dispute with AAR. Yet even now, it isn't clear which path it will take to extricate itself from the mess.

The options under consideration include allowing TNK-BP to participate in the Arctic venture, possibly through an equity interest, or compensating AAR financially to win its assent to the deal, according to the person familiar with the matter. However, some people close to BP think AAR is likely to demand a level of compensation that is far beyond what BP could accept.

Alternatively, Rosneft, BP or a third party could buy out AAR's stake in TNK-BP; or Rosneft or a third party could buy out BP's stake, the person familiar with the matter said.

Most of those options are considered extremely difficult to execute, according to analysts. AAR's 50% stake in TNK-BP is thought to be worth at least $25 billion, and it would be hard for BP or Rosneft to raise that kind of capital. The Russian government, opposed to foreign ownership of its strategic natural resources, may also balk at BP taking full ownership of one of Russia's largest oil producers.

On the other hand, BP would be loath to divest TNK-BP, whose rich dividend flow quickly exceeded BP's original investment, industry observers say.

In addition, it is unclear who would buy its stake. Most other Western oil companies are too risk-averse to make such a big bet on Russia.

"I think BP selling out of TNK-BP is the least likely option," said a Russian banker with knowledge of the firms. "It's a cash machine." He expects BP to offer AAR compensation, "a considerable payout, running into the billions of dollars."

There is little sign Rosneft will agree to an extension of the share-swap deadline, given its doubts about whether BP would be able to prevail in arbitration with AAR. "[Rosneft] seem to be frustrated," one person close to BP said. A spokesman for the Russian company said it had received no proposals from BP.

Meanwhile, people close to TNK-BP said the company was planning lawsuits against BP and its managers to claim compensation for damages the venture allegedly suffered from missing out on the Rosneft deal. People close to BP dismissed the leaks as a pressure tactic, apparently aimed at signaling BP won't be able to restore the status quo inside TNK-BP that existed before it announced its tie-up with Rosneft. Media reports about the planned lawsuits helped push BP shares lower Tuesday.

BP, Rosneft Deal Injunction Upheld by Arbitrators

BP, Rosneft Deal Injunction Upheld by Arbitrators

Friday, April 08, 2011
Dow Jones Newswires

by  Jacob Gronholt-Pederson & Alexis Flynn

An arbitral tribunal has ruled that an injunction prohibiting a share swap between BP and Russia's Rosneft will remain in place until further notice, but allowed the U.K. oil major to discuss the extension of an April 14 deadline with the Russian company, BP said Friday.

A Stockholm tribunal last month said BP and Rosneft wouldn't be allowed to proceed with their strategic tie-up, which includes a $16 billion share swap and joint exploration of three licenses in Russia's Arctic Kara Sea, ruling in favor of BP's billionaire oligarch partners in TNK-BP, who say BP must pursue all business opportunities in Russia through the joint venture.

Despite the ruling, BP sought a determination from the Stockholm arbitrators as to whether the share swap element of the agreement could proceed on its own.

"The arbitral tribunal has ruled that the interim injunction prohibiting closing of the share swap transaction with Rosneft will remain in place until further notice," BP said in a statement.

BP's Russian partners in TNK-BP--a group of Soviet-born businessmen known as the Alfa-Access-Renova consortium, or AAR--welcomed the ruling, saying the tribunal had asked BP and AAR to submit additional evidence to review the share swap.

"AAR welcomes the decision of the tribunal, which we consider fair, balanced and thoughtful," a spokesman said.

BP is working under pressure in Russia, as an exclusivity agreement to close the proposed share swap and exploration deal with Rosneft expires April 14. The tribunal, however, allowed BP to discuss with Rosneft an extension of that deadline.

A BP spokesman said the company is still considering its options, while a Rosneft spokesman said it hasn't received a formal offer from BP to extend the deadline.

People familiar with the situation Thursday said BP has asked for the TNK-BP board to be assembled early next week in case the arbitration ruling would required immediate action. But one person close to BP said it may take several days before BP and Rosneft would be able to agree on an extension of the ruling.

BP wants to proceed with the share swap and may seek to do the Arctic exploration deal through TNK-BP, one person familiar with the situation said. Last month, BP directors voted against the joint venture's involvement in the project at a TNK-BP board meeting.

Rosneft Acquires Exploration License in Nenets Autonomous District

Rosneft Acquires Exploration License in Nenets Autonomous District

Thursday, April 07, 2011

Rosneft

Rosneft acquired a license to explore the Naulsk oil field, located in the Nenets Autonomous District. The Company paid RUB 3.6 billion for the license at auction.

It is assumed that OOO Severnaya Neft, a Rosenft subsidiary, will be the operator of the project. Severnaya Neft is already engaged in exploration and production activities at three fileds - Cherpayusk, Nadeiyusk and Khasyreysk, which are part of the Val Gambourtseva oilfield.

Naulskoye's oil reserves, classified as C1 and C2, are estimated at 51.3 million tons of oil. Production should reach a maximum volume of one million tons per year. The lot size is 70.7 square kilometers. At a minimum, the cost of exploring the field is estimated at 1.5 billion rubles, including for the drilling of three wildcat wells and one exploration well, in addition to the gathering of 2-D and 3-D seismic data.

Field commissioning expected in 2016.

Polar Lights, a joint venture between Rosneft and ConocoPhillips, is currently exploring five fields in the Ardalinsk Group, which are also located in the Nenets Autonomous District.

BP, Rosneft Look to Salvage Alliance after Setback

BP, Rosneft Look to Salvage Alliance after Setback

Friday, March 25, 2011

by  Guy Chazan & Gregory L. White

The Wall Street Journal

 

BP and Rosneft scrambled Friday to salvage their landmark alliance after BP's Russian partners in its TNK-BP Ltd. joint venture blocked it. But it is unclear how a deal so mired in legal challenges and high-stakes Russian power struggles can now be rescued.

Rosneft still appears determined to implement its tie-up with BP, despite Thursday's decision by a Stockholm arbitration panel to effectively put it on ice. The Russian company's chairman, Igor Sechin, noted the arbitrators did not block the deal completely, but simply extended an injunction temporarily freezing it.
Sechin, who is also Russia's deputy prime minister, told Russian newswires that Rosneft was "satisfied" with BP as a partner, and was working on a series of measures to allow it "to defend its interests."
That suggests the state-controlled oil company has not given up on its proposed alliance with BP, under which the two firms agreed to swap shares in each other and explore for oil and gas together in the frigid, hydrocarbon-rich waters of the Russian Arctic.

The panel's move marked a setback for the architects of the deal, Sechin and BP Chief Executive Bob Dudley, and both are bound to lose face as they seek to navigate a way out of the impasse. Some analysts worry the dispute could harm BP's overall position in Russia, which accounts for one-quarter of its global oil and gas production and close to a fifth of its reserves.

"On the face of it this looks a messy situation and one where we think BP will do well to emerge with all of its investment in TNK-BP, reputation in Russia and Arctic oil deal intact," Citigroup said in a note.
But for the apparent winners of the spat, Access-Alfa-Renova or AAR, the group of Soviet-born billionaires who own 50% of TNK-BP, the victory may be Pyrrhic. Some bankers and analysts say AAR could soon face pressure from the Russian authorities to drop its opposition to a deal that has the public support of the country's top leaders.

"It's pretty risky to challenge the government on something that's considered strategically important," said one veteran Moscow banker.

People close to AAR insist the Russian shareholders are confident they have the support of the authorities for what they see as a defense of their legal interests.

One way out of the standoff would be for TNK-BP to participate in the Arctic project in place of BP, as the joint venture's management had proposed last month. At the time, both Rosneft and BP opposed that option, arguing that TNK-BP lacked the experience and technology required for the venture.

Sechin appeared to soften his position slightly Friday, saying TNK-BP might be able to come up with a structure that would allow it to take part -- such as by outsourcing some of the work to others with experience drilling offshore. "But this is a somewhat different construct," he said.

BP, meanwhile, is still determined to at least salvage the share swap element of its deal with Rosneft. It said Thursday that it would be seeking a determination from the Stockholm arbitrators as to whether that part of the agreement "may proceed on its own."

A BP spokesman denied suggestions from analysts that such an equity investment would be of dubious strategic value to BP without the Arctic deals. "It would still be a very effective way of building on the relationship we've had with Rosneft since the late 1990s," he said.

In opposing the BP-Rosneft tie-up, AAR argued that it violated their shareholder agreement with BP, which stipulates the U.K. company must pursue all business opportunities in Russia exclusively through TNK-BP. The deal was sent to independent arbitrators after AAR won a court injunction last month freezing it.

The Russian tycoons can now either ensure that TNK-BP is dealt in on the BP-Rosneft alliance, or that they are richly compensated for dropping their opposition to the deal.

Thursday's ruling will also give them maximum leverage if they want to discuss terms for an exit from TNK-BP, according to people close to the situation. "This at least forces everyone to the table," said one person.
AAR insists they have no plans to sell, and Sechin said Friday that Rosneft has not discussed a buyout with them. The likely price tag -- at least $30 billion -- would make the deal a costly one for any potential buyer, analysts and bankers say.

Another possible outcome could see BP selling its stake in TNK-BP to another international oil company, thereby freeing the U.K. giant up to proceed as planned with its Rosneft deal. No such discussions have been held, according to people close to TNK-BP.

The most painful scenario for BP would be to see the Arctic deal go to a rival, such as Shell or Chevron.
The exclusivity period of its deal with Rosneft expires Apr. 14. Yet people familiar with the situation say it's unlikely any other Western major would agree to swap shares with Rosneft. BP's willingness to carry out such an arrangement was a key factor in it winning the Arctic deal.