NOVO-OGARYOVO, Russia - U.S. energy giant Exxon Mobil Corp. and Russia's OAO Rosneft agreed Wednesday to broaden their joint venture by adding seven more licenses to develop oil and gas resources on Russia's Arctic shelf and mull a proposal to export liquefied natural gas from the Russian Far East.
The companies also signed a separate deal to give state-controlled Rosneft the option of buying a 25% interest in Exxon's Point Thomson Unit, which Exxon says is estimated to hold a quarter of the known natural gas resources buried beneath Alaska's North Slope. Exxon owns 62.5% of Point Thomson.
The deal, signed by Rosneft Chief Executive Igor Sechin and Exxon's Deputy Chief Executive Stephen Greenlee, further strengthens the budding relationship between two of the world's largest oil companies while competition to unlock the Arctic's vast trove of oil and gas wealth heats up.
The Arctic is one of the few remaining places that can move the needle for oil giants in terms of production and reserves, but the technical challenges are formidable. Earlier this week Royal Dutch Shell Plc said it was sending two Arctic ships operating in Alaska to Asia for repairs following a series of mishaps, a move that is likely to make the Anglo-Dutch oil giant miss the short summer drilling season that starts in July.
Exxon and Rosneft formed an alliance in 2011 to develop potentially huge but largely untapped reserves on Russia's Arctic shelf and shale oil in Western Siberia. The original deal also gave Rosneft the option of participating in U.S. shale developments. Fadel Gheit, an analyst with Oppenheimer & Co., says that Exxon's strategy to allow Russian participation shows that the most successful way to negotiate with Russian oil companies is to deal with them as equal partners. "They want to make it a two-way street," Mr. Gheit said.
Rosneft also has partnership deals with Italy's ENI SpA and Norway's Statoil ASA to develop offshore resources.
Rosneft is currently buying competitor TNK-BP in a deal worth $55 billion that will create the largest listed oil producer in the world and will hand BP PLC a 19.8% stake in the oil giant.
Exxon and Rosneft will conduct a feasibility study on constructing a liquefied natural gas plant on the island of Sakhalin off Russia's Pacific coast. Rosneft is lobbying to be allowed to export LNG, which only OAO Gazprom currently is permitted to do by law.
Angel Gonzalez contributed to this article.
Copyright (c) 2012 Dow Jones & Company, Inc.
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