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Russia: Chevron to get 1/3 stake in Rosneft JV to develop the Val Shatsky field


08 Jul 2010

Photo - see caption

Chevron will take a roughly 30 percent stake in its Black Sea oil venture with Russia's largest oil producer, Rosneft, industry sources said. Last month Chevron and Rosneft signed an agreement to jointly explore and develop the Val Shatsky field on Russia's Black Sea shelf, a deep-water region that analysts say presents major geological difficulties. At the signing, Russia's top energy official Igor Sechin said initial exploration investment, to be financed by Chevron, would amount to $1 billion.

The licence area of 8,600 sq km (3,300 sq miles), in the eastern part of the Black Sea, has a maximum depth of 2,200 metres (7,218 ft), which is considered difficult for deep water drilling. Other foreign oil companies looking to tap Russia's vast hydrocarbon resources have also had to make do with similiar ownership structures for operations with Russian partners.

Chevron's Chief Executive John Watson underscored the issue of speedy cost recovery with Prime Minister Vladimir Putin, who presided over the signing ceremony between the companies. 'It is a highly prospective area, it does have geological risks and high costs. We will need to work closely with the government to ensure that proper fiscal terms are in place to allow this project to develop rapidly,' Watson said.

Russian oil industry profits are heavily taxed through the mineral extraction tax and the oil export duty, but firms operating difficult projects have in the past successfully lobbied for tax breaks. In July 2009, the Russian government scrapped the mineral extraction tax for Black Sea shelf deposits until production from the fields reaches 20 million tonnes, but the oil produced remains subject to the export duty.

Last December the government lifted the export duty for oil extracted at 22 remote East Siberian fields whose operators have been burdened by high infracture development costs. The export duty was re-introduced this month, albeit at a lower level than mature fields, but firms developing costly projects in other regions continue to lobby for similar breaks at offshore projects. Sechin said that reducing the export duty for the Black Sea project had not yet been discussed.

Shatsky Ridge

The Shatsky Ridge (Western Black Sea Licence Area) covers 8,600 sq kms and is located in the eastern waters of the Black Sea. Ten potential hydrocarbon structures have been identified, of which 5 appear promising as they contain approx. 80% of the licence area’s resources, or approx. 860 million tons of oil under international classification. A seismic survey is currently in progress in the licence area and drilling of the first exploration well is scheduled for the end of 2011.

Source: Newswires / energy-pedia





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