27th May 2014 05:43
LONDON (Alliance News) - Russian state oil company OAO Rosneft and British oil giant BP PLC have signed a deal to jointly develop the Domanik shale formations in Central Russia's Volga-Urals region.
The two companies will form a joint venture that will be incorporated in Russia, with Rosneft owning a 51% stake in the company and BP owning the remaining 49% stake. The deal comes amid US government-lead sanctions that were imposed in March against Russia over the Ukraine crisis.
Rosneft and BP signed a heads of agreement within the framework of the St. Petersburg International Economic Forum by Rosneft President and Chairman of the Management Board Igor Sechin and BP Russia President David Campbell. Sechin is said to be part of Putin's so-called inner circle and has been targeted by US sanctions.
The Heads of Agreement provides for implementation of a joint pilot project by Rosneft and BP relating to the Domanik formations. In the event of success, the deal includes the possible development of unconventional Domanik resources. BP owns an almost 20% stake in Rosneft.
BP will compensate part of the historical costs to Rosneft for exploration of the Domanik formations and will provide carry financing of up to USD300 million for the pilot program, which will be conducted in two phases at license blocks in the Orenburg Region.
BP closed Friday's trading at USD51.10, down USD0.11 or 0.21% on a volume of 3.51 million shares.
Copyright RTT News/dpa-AFX
Related Shares:
BP