The article takes a look at some of the developments between BP and Rosneft and other deals made by Rosneft on Friday.
On Friday, BP plc agreed to make a payment of $750 million to Rosneft Co. for a 20% of minority ownership in the Taas-Yuriakh Neftegazodobycha LLC. Various sanctions were forced on Russia in 2014 followed by its interference in Ukraine. The sanctions protect Russia from gathering finance from the market of west. Moreover, the sanction on country also limits it from gaining access to Western tech to get shale reserves.
However, the limitations were not able to stop the country from involving in selling and buying of assets. Rosneft also entered into a contract with France's Total SA (ADR) to get 16.67% of ownership stake in the German oil refinery. The company signed an agreement with Total, which permit Rosneft to acquire 16.67% ownership in PCK Raffinerie. The deal might be valued at approximately $300 million. It will let Total to step away from downstream activities, and will also allow the company to focus on its main operations of production and exploration.
Majority of the deals, as stated above, rose on Friday in Russia at St. Petersburg International Economic Forum. Igor Sechin, Chief Executive Officer of Rosneft also signed refining, production and exploration deals with BP plc.
The London oil company was somewhat hopeful regarding the deal and remain seeing Rosneft as its tactical partner in the long term. David Campbell, President BP said over the issue, BP will continue to seek attractive investment opportunities to develop Russia's substantial resources whilst continuing to comply with international sanctions", as reported by Bloomberg. While Russia was hesitant to enter into oil and gas contracts previously, the deal might be beneficial to Russia, and will help it to raise capital.
According to the Wall Street Journal, Renaissance Capital analyst, IIdar Davletshin said related to issue, "It's a form of indirect financing, Russia has been reluctant to do this until now, but the time is different."
BP plc might also get advantage from the agreement as it will allow the company to add more reserves and explore at much lower rate. Mr. Campbell said, "BP will continue to seek attractive investment opportunities to develop Russia's substantial resources, whilst continuing to comply with international sanctions."
Russia's biggest oil company's website specified that the joint venture production might increase to 100,000 barrels of oil equivalent a day from the present level in the year 2017. As quoted by WSJ, Rosneft and BP might engage in production and exploration in the said region of combined interest.
BP in association with Rosneft will also work on the restructuring on Ruhr Oel GmbH their German venture.