Rosneft and ExxonMobil signed agreements expanding Western Siberia tight oil development and sealing ExxonMobil’s entry into the Arctic Research and Design Center for Offshore Development
Rosneft and ExxonMobil signed agreements for the joint development of several tight oil fields in Western Siberia and for ExxonMobil’s entry into the Arctic Research and Design Center for Offshore Development. The signing marks a further step in the implementation of the long-term Strategic Cooperation Agreement signed between the two companies in August 2011 and paving the way for broad cooperation between the companies in Russia and in a number of international projects managed by ExxonMobil.
The agreements were signed by Rosneft President Igor Sechin and ExxonMobil Exploration Company President Steven Greenlee in the presence of Russian President Vladimir Putin. The signing ceremony was also attended by Rex Tillerson, chairman and chief executive officer of ExxonMobil Corporation and members of Rosneft Management Board.
Rosneft and ExxonMobil agreed to expand and accelerate joint efforts to develop tight oil in shale formations with low permeability at several Western Siberian oil fields deploying the advanced technologies that ExxonMobil has successfully used at some of its own fields.
The agreement to develop tight oil reserves in Western Siberia envisages a pilot survey programme to identify the best solutions for developing the reserves. The pilot survey builds on a technological research programme that featured in the Agreement on joint development of tight oil production technologies signed by Rosneft and ExxonMobil in April 2012.
Rosneft and ExxonMobil are shortly due to agree a schedule of work to be carried out at selected Rosneft license blocks to conduct geological study and wells drilling at Bazhenov suite and Achimov formations. Drilling is scheduled to start in 2013. Financing for the tight oil geological study and pilot operations programme will be provided by ExxonMobil, which is taking on the execution risk. If the programme yields encouraging results the parties will set up an operator company with Rosneft holding a 66.67% interest and ExxonMobil holding 33.33% during the exploration stage.
Commenting on the agreement, Rosneft President Igor Sechin said: «We are not only looking at new geographies for our operations but are also opening up the potential of tight oil in established oil provinces. In that respect the Yuganskneftegaz region in Western Siberia appears to be the most promising. To realise the potential of such formations we need advanced technologies and tight oil development expertise. It will help satisfy growing global energy demand ».
Tillerson said the Western Siberia area presents a good opportunity for ExxonMobil and Rosneft cooperation: «This agreement combines the strengths of our two companies. ExxonMobil has technology leadership in tight oil and unconventional reserves development and Rosneft brings direct knowledge and experience of Western Siberia’s geology and conventional production».
Second agreement defines terms for ExxonMobil’s entry into the recently set up Arctic Research and Design Center for Offshore Development.
The Joint Center’s objective is to accumulate knowledge, technologies and expertise as well as conduct the whole range of research and development work for offshore projects. The Center will perform the following functions: monitor ice conditions, prepare ice breaker operations, design ice-resistant platforms and Arctic grade pipelines as well as provide logistical and organisational support. The Center will also handle hydrometeorological research and design new offshore technologies. Strict safety rules compliance and ensuring environmental safety are of particular importance for the Center – it will have a special offshore accident prevention and notification service.