BP and its new partner Rosneft expect to drill their first well in the Russian Arctic in 2015, according to Rosneft’s chief financial officer.
Last week BP and the Russian energy giant announced an alliance to explore and develop three license blocks on the Russian Arctic continental shelf.
These licences were awarded to Rosneft last year and cover approximately 125,000 square kilometres in the South Kara Sea, an area roughly the size of the UK North Sea.
This deal creates the first major equity-linked partnership between a national and international oil company. Rosneft will hold 5% of BP’s ordinary voting shares in exchange for approximately 9.5% of Rosneft’s shares.
BP and Rosneft have also agreed to establish an Arctic technology centre in Russia to develop know-how and engineering practices for the safe extraction of hydrocarbon resources from the Arctic shelf.
BP’s chief executive Bob Dudley said: “This unique agreement underlines our long-term, strategic and deepening links with the world’s largest hydrocarbon-producing nation. We are very pleased to be joining Russia’s leading oil company to jointly explore some of the most promising parts of the Russian Arctic, one of the world’s last remaining unexplored basins.”
He added: “Underpinning this alliance is a new type of relationship based on a significant cross-shareholding, and bringing together technology, exploration and safe and responsible field development skills. We are very pleased to welcome Rosneft as a strategic partner and major shareholder in the BP Group.”
Rosneft president Eduard Khudainatov said: “I am pleased that in just a few months we’ve significantly moved forward in implementing Russia’s offshore strategy. In its operations, our future joint venture will utilise the experience and expertise of BP, one of the leaders in the global oil and gas industry. This project is unique in its complexity and scale both for Russia and the global oil and gas industry. We see it as the next step in developing our relations with BP.”
The aggregate value of the shares in BP to be issued to Rosneft is approximately $7.8bn.
The deal has proved controversial. In the US, Congressman Edward Markey, a Democrat involved in an inquiry following BP’s Gulf of Mexico oil spill last year, said: “BP once stood for British Petroleum. With this deal, it now stands for Bolshoi Petroleum.”
Environmental groups Greenpeace and WWF have vowed to confront BP boss Mr Dudley over the alliance, while Friends of the Earth branded BP the world’s “environmental villain number one” for its plans to drill in the Russian Arctic.