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Bloomberg: Rosneft to Win License Next to Exxon’s Sakhalin-1 (Update1)

By Garfield Reynolds and Lucian Kim

Sept. 22 (Bloomberg) — OAO Rosneft, Russia’s state oil company, will win a license to explore for oil and gas at an offshore area bordering Exxon Mobil Corp.’s Sakhalin-1 project in the Pacific Ocean.

Rosneft was the only company to apply by the Sept. 14 deadline to take part in a planned auction of the license for the Lebedinsky field, said Nikolai Gudkov, a spokesman for the Natural Resources Ministry, today by phone. That means the auction will be canceled and the license awarded to Rosneft, he said.

Irving, Texas-based Exxon Mobil owns 30 percent of Sakhalin- 1 and operates the field. Rosneft owns 20 percent, as does India’s Oil & Natural Gas Corp. A group of Japanese companies owns the rest. Russian daily Kommersant said today that Rosneft may try to wrap the Lebedinsky field into Sakhalin-1 to gain a 25 percent blocking stake in the project.

“First we’d have to find oil before even thinking about increasing our share,” said Nikolai Manvelov, a Rosneft spokesman. Manvelov said he could confirm only that Rosneft had applied for the permit.

Exxon Mobil says the Lebedinsky field should be considered a continuation of the Sakhalin-1 development. The Russian government disagrees. Earlier this month, Deputy Natural Resources Minister Alexei Varlamov told Ben Haynes, president of Exxon Mobil’s Russian unit, that the borders of Sakhalin-1 could not be expanded to include new finds.

The U.S. oil company began pumping oil from Sakhalin-1’s subsea wells in October and plans to start exporting crude this month form the De Kastri terminal on Russia’s Pacific coast. The Natural Resources Ministry this week said the port didn’t fully comply with safety standards.

Russia wants Exxon Mobil, Royal Dutch Shell Plc and Total SA to cede some of the control they gained over three oil fields through production-sharing agreements that were granted in the 1990s. The foreign-led ventures have become anomalies in Russia as President Vladimir Putin increases state control over the energy industry.

To contact the reporters on this story: Lucian Kim in Moscow at [email protected] ; Garfield Reynolds in Moscow at [email protected]

Last Updated: September 22, 2006 05:21 EDT

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