BP signs shale pact with Rosneft

Heating up: BP has teamed up with Rosneft as international majors look to explore Russia's shale plays

UK supermajor BP has signed a heads of agreement to jointly explore for shale oil with Russian giant Rosneft, which could see the pair implement a joint pilot project.

The pair signed the agreement over the weekend which will see the duo target and, in the event of exploration success, develop the Domanik formations in Russia’s Volga-Urals region.

Under the agreement, BP will compensate part of Rosneft’s historical backcosts for exploring the formations and provide carry financing of up to $300 million for the pilot project.

BP said the pilot programme would be carried out in two phases at licence blocks in the Orenburg region.

Rosneft will hold a 51% interest in the joint venture, with BP holding the remaining 49% equity.

The deal between BP and Rosneft came just days after Total and Lukoil finalised a deal to team up and explore the Bazhenov shale oil play in western Siberia.

The US Energy Information Administration estimates Russia holds 75 billion barrels recoverable shale oil resources, placing it ahead of the US and China which are estimated to hold 58 billion and 32 billion barrels respectively.

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