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Friday 21 June 2013  

Rosneft and ExxonMobil strengthen their strategic cooperation

- The formation of a cooperation framework for the implementation of projects in the Kara Sea and the Black Sea
- Basic agreements have been signed regarding seven license blocks in the Chukchi Sea, the Laptev Sea and the Kara Sea 
- The foundation has been established for the creation of a joint venture for implementing a pilot project for the production of hard-to-recover oil reserves in Western Siberia
- Transition to the Next Stage of LNG Plant Construction Planning in Russia’s Far East

ST. PETERSBURG, Russia — Today, Rosneft and ExxonMobil announced the completion of several work stages as part of their Agreement on Strategic Partnership concluded in 2011, including the creation of joint ventures for projects in the Kara and Black Seas, agreement on the principles of the operation of their joint ventures as part of the seven additional licenses in the Russian Arctic and under their pilot project for the production of hard-to-recover oil resources in Western Siberia. In addition, the companies reached an agreement on the transition to the next stage of planning for the potential realization of an LNG project in Russia’s Far East.

The agreements were signed today at the Petersburg International Economic Forum by Rosneft’s President and Chairman of the Board, Igor Sechin, and by the Chairman of the Board and President of Exxon Mobil Corporation, Rex Tillerson. 

The operator in the joint venture for the Black Sea project is Tuapsemorneftegaz SARL, and for the Kara Sea project it is Karmorneftegaz SARL. These joint ventures will carry out the implementation of projects based on an agreement with the license holder, OJSC NK Rosneft. Rosneft’s share participation in both projects is 66.67 percent, while that of ExxonMobil is 33.33 percent. Costs in the initial period of exploration in both regions are estimated to amount to over USD 3.2 billion.

ExxonMobil will finance most of this amount. In 2013, work will continue on the collection of data for both regions up to the beginning of drilling operations in the Kara and Black Seas in 2014.

In February, Rosneft and ExxonMobil announced their intention to further include seven new mineral resource blocks in the Russian part of the Arctic, namely in the Chukchi Sea, the Laptev Sea and the Kara Sea, in the scope of their joint activities, covering a total area of about 150 million acres (600,000 square kilometers). Rosneft and ExxonMobil signed agreements forming the basis for the establishment of joint ventures to operate in these regions. At present, there are plans to explore these blocks, which are among the most promising and least explored in the world, in order to collect geological data. In accordance with the license obligations, 14 appraisal and exploration wells will be drilled in these blocks, and substantial 2D and 3D seismic work will be carried out.

Moreover, documents were signed that lay the foundations for the creation of a new joint venture for implementing a pilot project for the production of hard-to-recover oil resources in Western Siberia, as part of which data-collection work has already begun. Rosneft’s share participation in this project is 51 percent, while that of ExxonMobil is 49 percent.

The parties also signed an agreement specifying the next steps for the development of a project for the construction of an LNG plant in Russia’s Far East. In accordance with the agreement, the parties will complete works by the end of 2013 that will help ultimately determine the choice of the site for the plant construction, the gas liquefaction technology and the project business model. Upon completion of this work, the parties plan to proceed with further project engineering detailing.

Commenting on the signing of these agreements, Igor Sechin said: “It should be noted that implementation of the strategic cooperation agreement with ExxonMobil is ahead of the initial schedule. I would like to thank the members of our companies’ working groups for their intense and coordinated work.

Our cooperation concerns the most promising areas in the oil and gas industry: blocks on the Arctic shelf and deep-water blocks in the Black Sea with a total area of 773,000 square kilometers, hard-to-recover oil resources in Western Siberia and a promising LNG project in Russia’s Far East. We are convinced that implementation of all these projects will serve the interests of the shareholders of both companies. We believe they will provide an impetus for the further development of the oil and gas and related industries, and they are already creating demand for equipment, experience and technologies.”

“ExxonMobil is investing heavily in Russia, and these agreements are the basis for our projects and future collaboration,” said Rex Tillerson. “We know from experience that a good base is a defining factor for success, both in the Arctic and in any other region. Our joint project with Rosneft, Sakhalin-1, is an example of how our experience has been put into practice.”

In addition, on June 11, 2013, Rosneft and ExxonMobil signed the final agreements on the establishment of an Arctic Research and Engineering Center (Arctic Center) in Russia, as well as an agreement on the joint use of technologies in different parts of the world. ExxonMobil will provide funding for the initial stage of research at the Arctic Center in the amount of USD 200 million . The next USD 250 million for continued joint research will be invested by Rosneft and ExxonMobil in equal shares. Partners’ Share Participation: Rosneft: 66.67%; and ExxonMobil: 33.33%. The Arctic Center will use Rosneft and ExxonMobil’s existing know-how to create environmentally safe and more effective technologies.

These materials include forward-looking statements regarding future events and expectations. Any statement in these materials that is not information about previous accounting periods is a forward-looking statement involving known and unknown risks, uncertainties and other factors, as a result of which actual results, indicators or achievements may significantly differ from the anticipated results, indicators or achievements that are expressly or implicitly set out in these forward-looking statements. We assume no obligation to update information included herein to reflect actual results, changes in initial assumptions or factors that affect these forward-looking statements.