MOSCOW --BP and Rosneft have agreed to explore and develop three license blocks – EPNZ 1, 2, 3 – in the South Kara Sea, off northern Russia.
These licences were awarded to Rosneft in 2010 and cover around 125,000 sq km (48,263 sq mi) in what BP says is a highly prospective area, equivalent in size to the UK North Sea.
BP adds that this is the first major equity-linked partnership between a national and international oil company. Rosneft will hold 5% of BP's ordinary voting shares in exchange for around 9.5% of Rosneft's shares. The share swap component is designed to establish the alignment needed to pursue joint projects.
The two companies first cooperated in 1998, entering an alliance that led to the formation of three joint ventures to conduct exploration offshore Sakhalin, eastern Russia.
In January 2006, they launched a scientific research study to evaluate the potential of the Russian Arctic.
Under the new accord, they have also agreed to establish an arctic technology center in Russia which will cooperate with Russian and international research institutes, design bureaus and universities to develop technologies and engineering practice for safe extraction of hydrocarbon resources from the Arctic shelf.
Longer-term, Rosneft and BP will assess hydrocarbon prospectivity in areas beyond the Kara Sea.
Rosneft claims to be Russia's leading oil-producing company, with output of around 2.4 MMboe/d, and reserves of 15,146 Bboe.