Rosneft, Eni to Jointly Finance Russian Offshore Exploration

Rosneft has announced today that it has signed an agreement with Eni to jointly finance geological exploration work at three Russian offshore blocks.

The deal was signed between Rosneft subsidiary Val Shatskogo and Eni's Russian arm Eni Energy Russia. The signing of the agreement was witnessed by Russian Prime Minister Dmitri Medvedev, and Italian Prime Minister Mario Monti, Eni said in a separate statement today.

The deal will see the two companies involved in financing of the Fedynsky and Central Barents blocks in the Barents Sea and the Western Chernomorsky block in the Black Sea. All three prospects are estimated to be very positive for oil and gas, with prospective recoverable resources at the Fedynsky and Central Barents blocks estimated at 2 billion tonnes of oil and 1.9 trillion cubic metres of gas and recoverable resources at the Western Chernomorsky block estimated at 1.36 billion tonnes of oil.

The financing agreement furthers a deal already signed between Eni and Rosneft. The previous agreement, a strategic cooperation agreement signed in April this year, was finalised last month.

Through the agreement signed today, Eni has agreed to "fully finance geological works stipulated in license obligations," a statement from Rosneft said today. The costs if the exploration will be split proportionately to each company's stake in the three blocks, with Rosneft shouldering a 66.67 per cent share of expenses and Eni taking on the remaining 33.33 per cent share. Eni will also compensate the majority of historical costs on completed geological works at the three blocks, Rosneft said.

Eni will be repaid its investment should production begin on the three blocks. Rosneft will not be required to repay the investment should production not begin.