Rosneft and BP have signed a Heads of Agreement on the unconventional Domanik formations in the Volga-Urals region of Russia. The Heads of Agreement provides for implementation of a joint pilot project by Rosneft and BP relating to the Domanik formations and, in the event of success, their possible development. The joint venture company (Rosneft 51%, BP 49%) will be incorporated in Russia. BP will compensate part of the historical costs to Rosneft for exploration of the Domanik formations and will provide carry financing of up to US$300m for the pilot programme, which will be conducted in two phases at licence blocks in the Orenburg Region.
Meanwhile, Total and Lukoil have created a joint venture (51% Lukoil, 49% Total) to explore and develop the tight oil potential of the Bazhenov play in Western Siberia. The joint venture will assess the technical feasibility of developing the tight oil potential of the Bazhenov formation initially on 4 licenses in the Khanty-Mansi Autonomous District. Seismic acquisition will start in 2014 and exploration drilling will follow in 2015. Total will contribute its Lyaminskiy 3, Vostochno-Kovenskiy and Tashinskiy licences to the JV while Lukoil will add the Galyanovsky license.
These agreements were signed amid Western sanctions against Russia over Ukraine in March 2014. Russia is betting on unconventional resources to offset depletion in its western Siberian conventional deposits and aims to repeat the shale oil boom in the United States. The US EIA estimates Russian recoverable shale oil resources at 75 Gb, i.e. nearly 30% more than the US reserves (58 Gb).