UK oil and gas giant BP will pay Russia’s Rosneft $750million (more than £470million) for a stake in an east Siberian oil producer.
BP’s move follows Royal Dutch Shell plans to expand a natural gas export project in Russia.
BP will take a 20% stake in Taas-Yuriakh Neftegazodobycha in Russia’s far east, according to statements from Rosneft and BP today.
The companies will also jointly explore areas in Siberia and, if successful, form a venture with Rosneft holding 51%. Holdings in their German refineries will be reorganised as well, the partners said.
Europe’s biggest oil companies are looking for increased access to Russia’s vast energy reserves and their proximity to the markets of China and Japan even as the world’s second-biggest oil and gas producing nation seeks to maintain sales to Europe in the face of US-led sanctions.
BP reset its Russia strategy two years ago when it swapped its half in TNK-BP for cash and a 20% stake in state-run Rosneft.
“BP will continue to seek attractive investment opportunities to develop Russia’s substantial resources whilst continuing to comply with international sanctions,” David Campbell, president of BP in Russia, said in today’s statement.
While US and European sanctions against Russia for its role in the Ukraine conflict restrict Rosneft from borrowing internationally and limit access to offshore and shale technology, it doesn’t prevent it from selling assets.
The Taas-Yuriakh unit holds licenses for conventional oil and gas deposits. Output from the fields, near a pipeline to the Pacific coast, will be used to supply Russian far-eastern refineries and China, according to Rosneft’s website. Production will increase five-fold to 100,000 barrels a day in 2017 from current levels.
The unit also holds around 5.5trillion cubic feet of natural gas reserves, according to the website.
Rosneft and BP also agreed to reorganise their German venture Ruhr Oel GmbH, which has stakes in other refineries. BP will own all of the Gelsenkirchen refinery and solvent producer DHC Solvent Chemie.
In turn, Rosneft will take over all of Ruhr Oel’s holdings in the Bayernoil, PCK Schwedt and MiRO refineries, doubling its existing stake in each plant, according to the statement.
Rosneft executive chairman Igor Sechin said: “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.”
Mr Campbell added: “I am pleased we have been able to conclude this transaction.
“It further deepens our relationship with Rosneft and underlines BP’s position and strategy as a successful long-term investor in Russia.
“BP will continue to seek attractive investment opportunities to develop Russia’s substantial resources, whilst continuing to comply with international sanctions.”
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