ENI might become a partner of Rosneft

One of the main European partners of Gazprom, the Italian ENI, might start getting into the oil business in Russia. Kommersant has learnt that the company is negotiating with Rosneft on joining the production project at the Shatsky Ridge in the Black Sea. Chevron decided not to participate in this project at the beginning of the year. Rosneft needs it to start working in Libya via ENI, which has a number of assets.
Rosneft and ENI are discussing the possibility of the joint development of the Shatsky Ridge, sources close to the negotiations told Kommersant. ENI might obtain 33% in the JV and it will also have to finance the geological exploration at the initial stage that is assessed at about $1 bln – by the same scheme Rosneft realizes similar project with its new strategic partner ExxonMobil (in the Tuapse Trough in the Black Sea). In return the state company plans to gain the access to the assets in the North America, from ENI, according to the sources of Kommersant, - to the projects in Libya by paying only historical expenses. The certain list of Libyan projects hasn’t been determined as yet, one of the interlocutors of Kommersant says. According to another source of Kommersant, the negotiations might be over by the end of the year. Rosneft and ENI refused to comment on the joint work yesterday.
Shatsky Ridge OOO is the former asset of Yukos obtained by Rosneft in 2007. It holds licenses for the Western Black Sea license site. Its perspective resources are estimated at 860 mln tons, but there is no fresh information on the resources. Earlier the reserves of the deposit were assessed at 97 mln tons. In the mid-2010 Rosneft agreed with Chevron on the joint development of the deposit. But the latter, having held seismic exploration, considered the project not to be perspective and didn’t sign a legally binding agreement with Rosneft.
Only in June Rosneft officially confirmed the information about the breach with Chevron. The head of Rosneft, E. Khudaynatov, said in mid-September that the company was negotiating with alternative partners. He mentioned ExxonMobil, with which an agreement on strategic cooperation had been already signed by that time, and also another 2 companies. A source of Kommersant in Rosneft thinks that the participation of ExxonMobil would be logical as they are already working at the Tuapse Trough, and it is a single structure in fact. But a source of Kommersant close to ExxonMobil says that it doesn’t have any plans on working at the Shatsky Ridge. The Tuapse Trough is enough for the company, an interlocutor of Kommersant says.
ENI has the experience of working in Russia and with the Russian companies, it is one of the key European partners of Gazprom. It was ENI that together with the Italian Enel that purchased the gas assets of Yukos in 2007 and its stake in Gazprom Neft. Later the control over the gas companies (united in the framework of Severenergy) and the papers of Gazprom Neft were resold to Gazprom. Later the monopoly divided the stake of Severenergy between Gazprom Neft and Novatek. Moreover, ENI is a large consumer of Gazprom's gas in Europe and together with the monopoly it realizes one of the most famous Russian energy political projects – on the construction of the gas pipeline South Stream from Russia to Europe via the bottom of the Black Sea.
The relations between ENI and Gazprom can’t be called simple. They have had many conflicts – in the framework of South Stream and gas supply. But recently the situation has become stable. ENI came to terms in the framework of the project in Russia. It transferred a significant part of its stake to new partners, EDF and Wintershall while Gazprom saved 50%. The stake of ENI fell from 50% to only 20% . The monopoly had set for ENI the lowest in Europe level of obligations by the minimum gas collection in the framework of the current contracts – 65% while the norm is 80-85%.
Gazprom Neft is still the only partner of ENI in the oil business among the Russian companies. In February the companies agreed that Gazprom Neft would obtain 33% (a half of ENI’s stake) in the consortium that develops the Elephant deposit in Libya (the Korean KNOC and the state NOC have 33% each) for $163 mln. The realization was disturbed by the revolution in the country but in the mid-September Gazprom and ENI signed an agreement that confirms the previous agreements. Now Gazprom Neft has the right to purchase a stake and check the state of the asset within 2 years. 
Sources of Kommersant say that Rosneft won’t try to compete with Gazprom and aim at Elephant. ENI has enough assets in Libya. The company has been working in the country since 1950s being the largest foreign investor. By the end of 2010 ENI held 13 permissions for exploration or production in the oil and gas sphere in Libya. Last year the company produced in Libya 270 thousand barrels a day (oil and gas in oil equivalent). Besides the Elephant among the company’s largest projects in the country are Bu-Attifel, Vafa and Bahr-Es-Salam (gas deposits) and Buri at the shelf.
The Shatsky Ridge, the perspectives of which are treated sceptically by many participants in the market, seems quite moderate. The deposit might be just the entrance ticket of ENI into the Russia’s oil sphere, the analyst from the Bank of Moscow D. Borisov thinks. Anyway, he adds, the perspectives of this project haven’t been determined as yet as Rosneft had better not hope for a really working large asset in Libya. However, for the state company Africa might turn out to be an important new market, Troika Dialog’s V. Nesterov thinks – Rosneft has a goal of international expansion and the resources of Libya are well studied. 

http://www.kommersant.ru/doc/1782027
Translated by Galiya Musabekova