) and Russian state-owned oil company OAO Rosneft have signed
shareholder and operating agreements for four offshore Russian
licenses that were included in their co-operation agreement signed
back in May. The latest deal entails the parties to form joint
ventures to explore the related licenses.
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Exploration work will now be conducted at the Perseevsky license in
the Russian part of the central Barents Sea and three licenses -
the Kashevarovsky, Lisyansky and Magadan-1 - north of Sakhalin
island in the Sea of Okhotsk. The duo agreed to set up a work
program that includes drilling of six wildcat wells in the areas
between 2016 and 2021. Statoil intends to fully finance the
exploration phase of the four licenses, which cover more than
100,000 square kilometers.
Statoil will hold 33.3% in each of the joint ventures while Rosneft
will have an equity share of 66.7%. The two state-owned companies
have also agreed to jointly bid for certain licenses in Norway's
upcoming licensing round. However, they remain unclear about
Statoil's properties that may be available to Rosneft as part of
Located in the western part of the Barents Sea, the Perseevsky
license block has prospective recoverable resources of more than 2
billion tons of oil equivalent. Whereas Magadan 1, Lisyansky and
Kashevarovsky license blocks have prospective recoverable resources
of over 1.4 billion tons.
In the wake of a surge in global oil demand, we see the Norwegian
oil major as benefiting from this cooperation alliance with the
world's largest hydrocarbon-producing nation. The pact will aid
Rosneft in extracting heavy oil in Siberia and shale oil in
Stavropol, in southern Russia through Statoil's expertise and
experience from developing unconventional hydrocarbon resources in
the U.S., Norway and Brazil.
Recently, Statoil's partnership with Rosneft in a
multibillion-dollar development program in the Gazprom-led Shtokman
gasfield in the Barents Sea was put on hold by Gazprom due to
escalating costs. The Norwegian giant, which held 24% interest in
the project − stated that it has already written off approximately
NOK 2 billion ($340 million) of investment and returned its shares
in that consortium.
In this connection, it is important to note that Rosneft had also
struck agreements with Italy's
) and U.S. energy behemoth
) for the exploration of oil in Russia's Arctic region.
We remain upbeat on Statoil's upstream initiatives and its
significant discoveries in the mature North Sea as well as in the
Barents Sea that reaffirm the potential of the Norwegian
Statoil retains a Zacks #2 Rank (short-term Buy rating).