BP, Rosneft to sign Sakhalin-5 deal

BP and Russian state oil major OAO Rosneft are expected to sign a deal on March 5 to develop an oil and gas project for Sakhalin Island, part of Russia’s far east, the Itar-Tass news agency reported March 3.

“The deal will allow us to drill the first exploration well this year,” the agency quoted Rosneft Vice President Sergei Alexeyev as saying and Dow Jones Newswires reported March 3.

Rosneft and its subsidiaries hold 51 percent of the offshore Sakhalin-5 project; BP owns 49 percent.

Under an earlier agreement, BP agreed to finance Rosneft’s share of exploring the block, which holds estimated reserves of 700-800 million metric tons, or between 5.1 billion and 5.8 billion barrels of crude oil and 450 billion cubic meters of natural gas, Dow Jones reported.

The Russian government recently refused to issue a license to a consortium of ExxonMobil, ChevronTexaco and Rosneft to develop the Sakhalin-3 block.