Schlumberger Buys Eurasia Drilling Stake In Test Of Russia-US Ties
MOSCOW, July 21 (Reuters) - U.S. oilfield services giant Schlumberger NV has agreed to buy a 51 percent stake in Russian peer Eurasia Drilling Co (EDC) in a deal likely to test Russia-U.S. ties.
The deal marks Schlumberger's second attempt to buy into EDC and the first U.S. stake in Russia's oil and gas sector since sanctions were imposed on Moscow after its 2014 annexation of Crimea.
"I warmly welcome Schlumberger as our majority shareholder. It builds on our strategic alliance with Schlumberger since 2011 and our mutually beneficial business relationship since 2007," EDC Chief Executive Alexander Djaparidze said in a statement late on Thursday.
In 2015, Schlumberger agreed to buy 45.65 percent of EDC for $1.7 billion but the deal fell through after Russia's Federal Antimonopoly Service repeatedly postponed its approval.
That deal met with resistance in Russia's higher echelons of power who were worried that Schlumberger might seize control of Eurasia, a senior government official said in 2015. EDC then delisted its shares on the London Stock Exchange.
The Kremlin declined to say whether Russian authorities had since warmed to the U.S. investor.
"If we talk about a global trend, Russia was, is and will be interested in foreign investment and in cooperation with foreign investors in all possible sectors, excluding the areas which are most sensitive," Kremlin spokesman Dmitry Peskov told reporters on a conference call.
"But even in these areas cooperation is still possible, and a relevant decision is to be taken in each separate case by the government's commission on foreign investment."
For Schlumberger, the investment would mean access to the Russian market where producers have sustained their capital spending despite low oil prices.
U.S. oilfield service companies have been supported by their operations in North America, where expanding shale production is driving revenue, but their international and offshore operations continue to be pressured by weak oil prices.
The Schlumberger agreement is also subject to approval by Russia's antitrust body, EDC said. Financial terms of the deal were not disclosed.
"Work on this investment remains ongoing and the company expects to enter into a definitive agreement in relation to it in the near future," EDC said.
Xenon Capital acted as financial adviser to EDC, a source close to the deal told Reuters.
In June, state-backed Russian Direct Investment Fund said it was buying a minority stake in Eurasia Drilling via a consortium with Chinese and UAE funds.
(Reporting by Polina Devitt and Vladimir Soldatkin in Moscow and Abinaya Vijayaraghavan in Bengaluru; additional reporting by Katya Golubkova and Dmitry Solovyov in Moscow; editing by David Clarke and Jason Neely)
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