Norway Oil Cos, Russian Majors in Talks on Field Stakes

OSLO, Nov 21, 2005 (Dow Jones Commodities News via Comtex)

Norwegian oil companies Statoil ASA (STO) and Norsk Hydro ASA (NHY) are in talks with Russian oil majors to get stakes in some of Russia's largest oil and gas fields, company officials and people close to the matter said Friday.

Russia's Gazprom OAO (GSPBEX.RS), Rosneft Oil Co (RNT.YY) and Surgutneftegaz JSC (SNGS.RS) are seeking foreign investment, exploration and production expertise while the Norwegian companies are looking to replace the fast-diminishing reserves on their home turf.

Company officials and people familiar with the matter said the two Norwegian companies are considering a list of eight offshore blocks the Russian Ministry of Natural Resources offered to the market late last month. They also hope to get a stake in several other fields, both onshore and offshore, besides the 3.2 trillion-cubic-meter Shtokman gas field, the people said. Both companies have been shortlisted for a possible position in the project.

Kristoffer Maroe, Statoil's vice president of Russian operations, told Dow Jones Newswires, "Natural Resources Minister Yuri Trutnev said he would prefer Russian companies to partner up with foreign companies."

"We have developed good relationships with Rosneft and Gazprom in particular," Maroe said, but he wouldn't elaborate on possible negotiations with the companies on current blocks offered.

"We are looking to participate in new exploration rounds in Russia," Maroe said, but added, "I will not confirm (whether) we will or will not go into any particular rounds at the present stage."

Late last month, the Ministry of Natural Resources offered six blocks in the Kara Sea, one in the Barents and one in the Chukchi Sea in eastern Russia.

A Moscow-based diplomat said Statoil was in talks with Gazprom and Rosneft about partnerships on some of the offered blocks, but declined to say which ones.

Although Maroe said Statoil had previously focused its attention on offshore Barents Sea blocks, he said his company was now "expanding the scope of interest" including West Siberia, offshore Sakhalin and the Caspian.

"We have also come to accept that there are genuine onshore business opportunities in Russia," Maroe said by telephone from Moscow. He said Statoil intends to produce between 100,000 barrels a day and 200,000 b/d in Russia by 2015.

The Moscow-based diplomat said Norsk Hydro was in preliminary talks with at least two of the three Russian companies, which was confirmed by a Hydro official familiar with the matter.

The Hydro official said his company was interested in all of the blocks on offer in the latest round, but had yet to decide whether or not to bid alone or to negotiate a joint bid with a Russian partner.

But, he added, a partnership was most likely given the indications by Russian government officials that they would prefer international participation to be secondary to Russian company involvement.

The diplomat also said - and the Hydro official later confirmed - that Hydro was also interested in Surgutneftegaz's giant 1.2 billion-barrel-of-oil-equivalent Talakan gas field in eastern Siberia.

Officials from both Statoil and Norsk Hydro have previously told Dow Jones Newswires the companies were interested in the giant Trebs and Titova blocks, with estimated reserves of up to 1.26 billion barrels of oil equivalent.

Although Hydro is reviewing all the offshore blocks offered in the latest round, it is primarily interested in the Gulf of Ob in the Kara Sea. Included in those blocks are Severo-Obsky with estimated reserves of 1.1 billion barrels of oil and 350 billion cubic meters of natural gas, the Tambei-Obsksy and Sabetta-Obsky blocks, estimated to hold up to 1.2 billion boe each, and three potentially large resource blocks.

The ministry said bids had to be accepted within two months, and if there is only one bid per block, the license would be issued automatically. If more than one bid is submitted, an auction will be held, likely in the second quarter of 2006.

Both Statoil and Hydro have said they aim to make Russia a core production area.

Hydro spokesman Lars Bjelvin said his company was looking at business opportunities besides Shtokman, and was aware of the latest round of blocks offered. But he added, "we won't comment on how, or if, we will get involved with those."

Rosneft declined to comment. Gazprom wasn't immediately available for comment, and a spokeswoman at Surgutneftegaz said, "We will participate in any tenders where we find attractive offers." She declined to comment on the possibility of forming a consortium.

Copyright (c) 2005 Dow Jones & Company, Inc.