BP and Russia on Friday agreed on major arctic projects as part of a groundbreaking strategic global alliance.BP and the state-run energy giant Rosneft signed a joint venture to explore and develop three license blocks (EPNZ 1,2,3) on the Russian Arctic continental shelf. The licenses were awarded to Rosneft in 2010.
"This unique agreement underlines our long-term, strategic and deepening links with the world's largest hydrocarbon-producing nation. We are very pleased to be joining Russia's leading oil company to jointly explore some of the most promising parts of the Russian Arctic, one of the world's last remaining unexplored basins," said BP COE Bob Dudley.
The projects will be performed in approximately 125,000 square kilometers in a highly prospective area of the South Kara Sea. This historic agreement is the first major equity-linked partnership between a national and international oil company.
Under the terms of the agreement, Rosneft will hold 5 percent of BP's ordinary voting shares in exchange for approximately 9.5 percent of Rosneft's shares. The swapping of shares creates a strategic alignment to pursue joint projects.
In addition, BP and Rosneft will establish an Arctic technology center in Russia which will monitor the projects and develop technologies and engineering practices for the safe extraction of hydrocarbon resources from the Arctic shelf.
The Artic technology center will work along of Russian and international research institutes, design bureaus and universities. BP and Rosneft will continue studies in the Russian Arctic to assess hydrocarbon prospectivity in areas beyond the Kara Sea.
The joint venture is also looking for international collaboration including a partnership with Ruhr Oel GmbH, a refining joint venture in Germany. Rosfnet recently purchased 50 percent of Ruhr Oel from PDVSA.
The aggregate value of the shares in BP to be issued to Rosneft is approximately $7.8 billion. The transaction is subject to certain listing approvals and the completion of certain administrative requirements and is expected to complete within a few weeks.
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