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Rosneft chooses Eni in Barents Sea

Vladimir Putin is central in the Barents Sea deal signed by Rosneft's Eduard Khudainatov and Eni's Paolo Scaroni. Photo: Government.ru

The two companies open a Russian-Italian strategic partnership in formerly disputed Russian-Norwegian waters.

Location

The agreement signed by Rosneft President Eduard Khudainatov and Eni CEO Paolo Scaroni on Wednesday makes the two company strategic partners in two very promising field structures in the Barents Sea. The Fedynsky field and the Tsentralno Barentsevo field are believed to hold a total of more than 25 billion barrels of oil equivalents.

The fields are both located near the newly delineated border between Russia and Norway. If the fields stretch across the border, the operators will have to deal with a set of regulations carefully outlined in the Norwegian-Russian border delineation agreement from 2011.

As previously reported, Rosneft has for some time signaled interest in teaming up with other companies in the Barents Sea. The state-owned company controls several promising field licenses in the area. With its partnership with Eni, the Russian oil major gets access to technology, experiences and cash needed for the development of the offshore fields.

Eni on the other hand, strengthens its role as key player in the Barents Sea. The company is from before heavily engaged in several license on the Norwegian side of the border and will be operator in the Goliat field, which is currently under development. In his meeting with Vladimir Putin, just ahead of the agreement signing ceremony, Paolo Scaroni stressed his company’s extensive knowledge of the area.

“This project is really attractive and of strategic importance for us. The field is located in the Barents Sea. We know this ocean perfectly well, because we were the first ones to open an oil field on this shelf, the part which belongs to Norway”, Scaroni said, a transcript from the government website reads.

It was long believed that Statoil, the major Norwegian company, would team up with Rosneft. Statoil is heavily engaged in the Barents Sea and is operator of the Snøhvit project, the first hydrocarbon field so far in production in the region.

Under the Russian-Italian agreement, Rosneft and Eni will set up a joint venture, with Eni holding a 33.33 percent stake. In accordance with the Russian regulation currently in place, Rosneft will remain owner of the licenses, while Eni will fund the exploration necessary for confirmation of the licenses’ commercial value, a press release from the companies informs. The deal includes the joint development of the licenses, the exchange of technologies and personnel, as well as Rosneft’s acquisition of a participating interest in Eni’s international projects. In addition to the the Fedynsky and Tsentralno Barentsevo fields, the deal also includes the Zapadno-Chernomorsky license in the Black Sea.

According to Rosneft, the Fedynsky license covers an area of 38,000 square kilometres in the ice-free southern part of the Barents Sea. Sea depth in the area varies from 200 to 320 metres. 2D seismic mapping conducted in the area have uncovered nine promising prospects holding total recoverable hydrocarbon resources of 18.7 billion barrels of oil equivalents. To comply with license conditions, 6,500 kilometres of 2D seismic must be carried out at the Fedynsky license before 2017 and 1,000 square kilometres of 3D seismic by 2018. The first exploration well should be drilled before 2020, and, if successful, a second exploration well is to be drilled by 2025.

The Tsentralno-Barentsevsky license is adjacent to Fedynsky. Sea depth here varies from 160 to 300 metres. Earlier seismic work at the license has identified three promising prospects holding total recoverable hydrocarbon resources of more than seven billion barrels of oil equivalent. A total of 3,200 kilometres of 2D seismic are to be performed by 2016 and 1,000 square kilometres of 3D seismic by 2018. The first exploration well is to be drilled by 2021, and if successful, a second exploration well is to be drilled by 2026.