SKADDEN ON ROSNEFT & EXXONMOBIL JV
01 Sep, 2011
Rosneft and ExxonMobil to Join Forces for Development of Arctic and Black Sea Resources, Expand Technology Sharing and Implement Joint International Projects
Skadden has announced that it is representing ExxonMobil Corporation in the establishment of a $3.2 billion joint venture with Rosneft to explore and develop the Russian offshore assets in the Black Sea and the Arctic for untapped oil and gas reserves.
Rosneft and ExxonMobil have executed a Strategic Cooperation Agreement under which the companies plan to undertake joint exploration and development of hydrocarbon resources in Russia, the United States and other countries throughout the world, and commence technology and expertise sharing activities.
The agreement, signed by Rosneft President Eduard Khudainatov and ExxonMobil Development Company President Neil Duffin in the presence of Russian Prime Minister Vladimir Putin, includes approximately US $3.2 billion to be spent funding exploration of East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea and the Tuapse License Block in the Black Sea, which are among the most promising and least explored offshore areas globally, with high potential for liquids and gas.
In the course of these projects, the companies will use global best practices to develop state-of-the-art safety and environmental protection systems.
The agreement also provides Rosneft with an opportunity to gain equity interest in a number of ExxonMobil’s exploration opportunities in North America, including deep-water Gulf of Mexico and tight oil fields in Texas (USA), as well as additional opportunities in other countries. The companies have also agreed to conduct a joint study of developing tight oil resources in Western Siberia.
The companies will create an Arctic Research and Design Center for Offshore Developments in St. Petersburg, which will be staffed by Rosneft and ExxonMobil employees. The center will use proprietary ExxonMobil and Rosneft technology and will develop new technology to support the joint Arctic projects, including drilling, production and ice-class drilling platforms, as well as other Rosneft projects.
“We have a clear vision for Rosneft’s strategic direction – building world-class expertise in offshore business and enhancing oil recovery,” said Rosneft president Eduard Khudainatov, following the signing ceremony. “The partnership between Rosneft with its unique resource base, and the largest and one of the most highly capitalized companies in the world reflects our commitment to increasing capitalization of our business through application of best-in-class technology, innovative approach to business management, and enhancement of our staff potential. This venture comes as a result of many years of cooperation with ExxonMobil and brings Rosneft into large scale world-class projects, turning the company into a global energy leader.”
ExxonMobil Development Company President Neil Duffin said: “Today’s agreement with Rosneft builds on our 15-year successful relationship in the Sakhalin-1 project. Our technology, innovation and project execution capabilities will complement Rosneft’s strengths and experience, especially in the area of understanding the future of Russian shelf development.”
Rex Tillerson, chairman and chief executive officer of Exxon Mobil Corporation (NYSE:XOM), who attended the ceremony, said ExxonMobil will benefit Russian energy development by working closely with Rosneft.
“This large-scale partnership represents a significant strategic step by both companies,” said Tillerson. “This agreement takes our relationship to a new level and will create substantial value for both companies.”
The agreement provides for constructive dialogue with the Russian Federation government concerning creation of a fiscal regime based on global best practices.
Additionally Rosneft and ExxonMobil will implement a program of staff exchanges of technical and management employees which will help strengthen the relationships between the companies and provide valuable career development opportunities for personnel of both companies.