Alliance Oil & Repsol Join Forces in Russia

Alliance Oil Company and Repsol have entered into an agreement to enter into a joint venture in Russia to explore and produce oil and gas. The $840 million deal sees Alliance take a 51 per cent share in the venture, with Repsol taking the other 49 per cent.

The companies says the venture will be off mutual benefit, with Repsol bringing its technological expertise and financing capabilities, and Alliance bringing its knowledge of and access to production and business opportunities in Russia.

Alliance will transfer its assets in the Volga-Urals region, including its subsidiaries Saneco and Tatnefteodatcha, to the venture. The assets, valued at $570 million, will be transferred on a debt-free, cash-free basis to the venture.

Repsol will carry out a capital increase to participate in the venture as well as paying Alliance cash to ensure its 49 per cent stake.

In addition to the joint venture, Repsol already holds an interest in Alliance of 3.5 per cent, resulting from a 2008 merger between Alliance and West Siberian Resources, a company in which Repsol had held a 10 per cent stake.

Chairman of Alliance, Eric Forss said the agreement would further both companies' interests in Russia.

"The creation of the joint venture will allow us to further expand our upstream operations in Russia through joint exploitation of the Volga-Urals assets and realisation of new business opportunities," he said. "Repsol is an international leader in oil and gas management, technology and financing and we now have the opportunity to share these resources with common objectives."

"This alliance will grant Repsol immediate access to producing assets in Russia, one of the world's largest hydrocarbon resource holders," added Antonio Brufau, Executive Chairman of Repsol. "We are certain that Alliance Oil's local expertise and Repsol's technological capabilities and know-how will provide a solid foundation for future growth in Russia."