ExxonMobil Corp. and Russia's OAO Rosneft said Tuesday they have forged an agreement to jointly explore and develop projects in North America, including the tight oil fields of Texas and the Gulf of Mexico (GOM), as well as in Russia and other countries around the world. The two oil giants also agreed to share technology in the wide-ranging transaction.
The agreement, signed in Russia by Rosneft President Eduard Khudainatov and ExxonMobil Development Co. Neil Duffin in the presence of Russian Prime Minister Vladimir Putin, includes about $3.2 billion to be spent funding exploration of Russia's East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea and the Tuapse License Block in the Black Sea, which are considered some of the most promising and least explored offshore areas globally, with high potential for liquids and gas.
Rosneft also would gain an equity interest in several of ExxonMobil's North American exploration opportunities, including the deepwater GOM and in the U.S. onshore, where ExxonMobil is the largest natural gas producer. The companies also agreed to conduct a joint study to develop tight oil resources in Western Siberia.
ExxonMobil CEO Rex Tillerson, who attended the signing ceremony, said the Irving, TX-based major would benefit Russia's energy development.
"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."
Rosneft and ExxonMobil plan to create an Arctic Research and Design Center for Offshore Developments in Saint Petersburg, Russia, which would be staffed by the companies' employees. The center would use proprietary ExxonMobil and Rosneft technology to develop new technology to support the joint Arctic projects, including drilling, production and ice-class drilling platforms, as well as other Rosneft projects.
Duffin said the new agreement "builds on our 15-year successful relationship" in the Russian-based 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."
"We have a clear vision for Rosneft's strategic direction -- building world-class expertise in offshore business and enhancing oil recovery," said Khudainatov. "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."
The agreement also provides for "constructive dialogue" with the Russian Federation government concerning creation of a fiscal regime based on global best practices. Additionally, the partners agreed to exchange technical and management staff to"help strengthen the relationships between the companies and provide valuable career development opportunities for personnel of both companies." The partners also said they planned to use "global best practices to develop state-of-the-art safety and environmental protection systems."
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