Rosneft, Japan`s INPEX Sign Okhotsk Sea Shelf Deal

The agreement, signed by Rosneft head Igor Sechin and INPEX CEO Toshiaki Kitamura envisages cooperation in a joint venture to explore the Magadan-2 and Magadan-3 blocks with estimated recoverable reserves of 1.577 billion tons of oil equivalent.

Under final agreements expected to be signed by the end of 2013, INPEX, which will hold a 33.33 percent stake in the project, will fully finance geological exploration work at the blocks.

INPEX will reimburse the licensed blocks’ development expenses incurred by Rosneft, and also 33.3 percent of a one-off license acquisition payment made by the Russian company.

The agreement provides for non-recurrent bonuses to be paid by INPEX to Rosneft for each commercial oil and gas discovery proportional to its stake in the project.

"Partnership between Rosneft and INPEX will contribute significantly not only to the development of the Russian Far East, but also to the development of economic relations between Russia and Japan, and will strengthen our partners' energy security,” Sechin was quoted as saying.

Under existing rules, only Russian companies with over 50-percent state ownership and no less than five years’ experience working in marine exploration are allowed to develop the Russian continental shelf. Only Rosneft and Gazprom currently meet these requirements, but they can involve other companies in the shelf development through joint ventures.