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Itar-Tass: Rosneft, BP sign agreements on $700 M investments in oil extraction

22.11.2006, 23.58
 
MOSCOW, November 22 (Itar-Tass) — Russia’s Rosneft company and British Petroleum (BP) Company have signed agreements on joint work in the East Shmidt and West Shmidt licensed sections of the Sakhalin-5 and Sakhalin-4 projects.

The agreements envisage 700-million-dollar investments in oil production within the next five years, Rosneft sources said on Wednesday.

The shares of the Russian and British companies in the joint implementation of the projects are 51 and 49 percent respectively, the Prime Tass economic news agency said.

The joint venture Elvary Neftegaz, created for the development of the Kaigansko-Vasyukansky section of the Sakhalin-5 projects, will manage the projects operationally.

It is expected that British Petroleum will finance geological surveys in both sections, including the drilling of six wells, up to their commercial commissioning. Later, Rosneft will compensate BP’s expenses from its share of oil output.

Rosneft’s subsidiaries – Vostok-Shmidt Neftegaz and Zapad-Shmidt Neftegaz – are subsoil users in both sections.

Currently, those sections are being explored. A unified strategy for the implementation of the Sakhalin-4 and Sakhalin-5 projects is being developed.

Common infrastructure for crude oil production and transportation will help to minimize capital costs for the two projects and create the largest oil and gas producing facility in Sakhalin’s north.

In connection with the signing of the agreements, the heads of the British Petroleum and Rosneft, John Brown and Sergei Bogdanchikov, also signed a joint statement, which expressed satisfaction with the accords that pave the way to the next stage of cooperation between the two companies.

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