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Italy and Russia partner on Arctic exploration

26th April 2012

ENI and Rosneft have signed a strategic partnership pact to share technologies and licenses with respect to exploration in two Arctic seas

Energy companies are fighting over exploration rights to one of the world's most oil-rich - but environmentally fragile - regions

Italian and Russian energy giants Eni and Rosneft have agreed to jointly explore hydrocarbons in the arctic.

The deal comes one week after the Russian company made a similar pact with ExxonMobil worth USD125 billion. The deal could lead to up to 85bn barrels of oil equivalent being extracted from the Arctic region.

The new deal is far less modest, focusing on two reserves in the Barents Sea and one in the Black Sea estimated to contain a total of 36bn barrels of oil equivalent.

However, the Barents Sea prospects are “very promising also thanks to the surrounding discoveries made by Eni in the Norwegian sector”, said ENI in a statement. Seismic data also indicates that multiple prospects exist in the Zapadno-Cernomorsky license.

CEO Paolo Scaroni and Rosneft President Eduard Khudainatov on Wednesday signed the strategic cooperation agreement in front of prime minister-elect Vladimir Putin.

The agreement provides for Rosneft's acquisition of a participating interest in Eni's international projects as well as to exchange technologies and personnel.

Technology exchange is a key element of the strategic partnership. Eni's technological contribution to the joint venture is expected to be significant given the company's extensive offshore experience in Norway and other countries.

Eni and Rosneft will set up joint ventures, with Eni holding 33.33 per cent in each, for the joint development of Fedynsky and Tsentralno-Barentsevsky licenses in the Russian offshore of the Barents Sea, and Zapadno-Cernomorsky license in the Russian offshore of the Black sea.

In accordance with the Russian regulation currently in place, Rosneft will remain owner of the licenses.

Eni will fund the exploration necessary for confirmation of the licenses' commercial value, in compliance with the commitments.

In addition, the agreement anticipates a programme of staff exchanges at all levels. This will strengthen the relationship between the companies and help share management experience.

Eni's CEO, Paolo Scaroni, commenting on the agreement said: "Today's agreement is strategic for Eni as it will mark our exploration activities for many years. We have gained access to two vast and extremely promising areas in Russia, a great hydrocarbon producer.

“This success is the result of our long standing relationship with Russia, of the recent developments in west Siberia upstream and of our discoveries in the Norwegian Barents Sea, the first in the area".


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