Rosneft and Shell in talks on Arctic oil field exploration
Rosneft proposed to establish a joint venture where the Russian side holds 67% and the rest is owned by a foreign partner. Above all, the foreign joint venture partner should provide the initial investment and facilitate a share exchange.
Putin underlined the possibility of continuing work with Shell, though there was no mention of how cooperation with BP on the arctic shelf would play out.
"It is possible, we’ve been working with Shell for a long time and they are quite a convenient partner for us. But work with BP did not stop and various scenarios are probable. The negotiations should be initiated on the corporate level."
Rosneft said that it is looking for the best possible solution regarding a partnership in the arctic project and continues to negotiate opportunities with all interested parties, with Shell and BP having equal positions
Shell and Rosneft CEO’s Peter Voser and Eduard Khudainatov discussed the prospects for the company’s operations at off-shore deposits in the Arctic and the Black Sea, as well as the possibility of expanding cooperation with Russian partners on May 25. The sides also discussed both companies' cooperation in a potential third country as well as Russia’s off-shore deposits.
A Shell representative said the company is in talks with Rosneft and looks forward to a positive outcome of the negotiations.
”Shell supports and welcomes all efforts to establish a partnership with Russian oil company Rosneft and is ready to contribute to and take part in arctic exploration as well as other international project developments together with Rosneft.”
Denis Borisov, a Bank of Moscow oil analyst, says the arctic shelf is a sweet pie for global oil market players.
“All big oil companies are interested in the Arctic field -a region with significant hydrocarbon reserves, given that the resource base for the largest oil companies will, in the long-term, be depleted within the next 25-30 years.”
Borisov added that this alliance will help Rosneft to diversify its technological and ecological risks.
“Shell may agree to provide the project with an initial investment just as BP agreed to do so earlier in expectation of the deal. Rosneft in that case could shift the funding onto the company, which could total $100 million during the first stage of the project."
Andrey Polishuyk, analyst from BCS, says Shell is not likely to agree to a share swipe.
“Without a doubt, it could be a great deal for Rosneft, but the probability is too low assuming that in the case with Shell, company shares are growing in price while BP cant boast about its share prices”