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Gazprom Neft and Novatek establish a joint venture for offshore operations in the Arctic

Press-release Arctic Partnership

Gazprom Neft and NOVATEK have established a joint venture to develop the Severo-Vrangelevsky license block, under an agreement signed by Alexander Dyukov, Chairman of the Management Board, Gazprom Neft and Leonid Mikhelson, Chairman, NOVATEK at this year’s St Petersburg International Economic Forum (SPIEF).

The transaction marks the fulfilment of a Memorandum of Understanding signed at the 2019 SPIEF — both companies having made clear their intention to cooperate in implementing projects in the Arctic and confirming their intention to establish a joint venture capable of undertaking the full range of activities involved in oil and gas prospecting, exploration and development. Pursuant to this agreement, NOVATEK acquires a 49% interest in the charter capital of Gazprom Neft subsidiary Gazpromneft-Sakhalin, which holds geological prospecting, exploration and development rights within the Severo-Vrangelevsky block. Gazprom Neft’s interest in the joint venture will be 51%.

The Severo-Vrangelevsky block forms part of Gazprom Neft’s offshore project portfolio. The 117,620 km2 block covers the East Siberian and Chukchi Seas. Sea depths at the block’s most promising geological structures run to depths of 20–90 metres. Gazprom Neft and NOVATEK’s joint assessments show the block to be highly promising, with considerable resource potential.

Gazprom Neft completed extensive seismic investigations at the Severo-Vrangelevsky block in 2018–2019, allowing the field’s geological model to beupdated and further geological prospecting works agreed with NOVATEK.

"The Russian Arctic Shelf has enormous — although yet not fully assessed — resource potential. But exploring and developing this demands major investment: which is why joint ventures are of the most effective models for offshore operations. Partnerships consolidate not just financial resources, but also the industry expertise and the material, human and logistical resources of the parties. We see great potential in the Severo-Vrangelevsky license block, which forms part of our agreement with NOVATEK, and see this transaction as a good example of strategic cooperation between Russian companies in consolidating Russia’s leadership in the Arctic."
Alexander Dyukov
Alexander Dyukov Chairman of the Management Board, Gazprom Neft
Notes for editors

Gazprom Neft and NOVATEK have a longstanding history of successful cooperation, including in developing and producing hydrocarbons in the Yamalo-Nenets Autonomous Okrug through their Arcticgas and Nortgas joint ventures.

Gazprom Neft is a vertically integrated oil company primarily engaged in oil and gas exploration and production, refining, and the production and sale of petroleum products. In terms of production and refining volumes it stands among the top three largest companies in Russia. Gazprom Neft’s corporate structure encompasses more than 70 exploration and production, refining, and retailing enterprises throughout Russia, the CIS and worldwide. The company operates across 110 countries, worldwide. Gazprom Neft’s filling station network currently totals more than 2,000 outlets throughout Russia, the CIS and Europe. Gazprom Neft is one of the Russian oil industry’s leading companies in terms of efficiency. Company revenues in 2020 were ₽2 trillion, adjusted EBITDA ₽485 billion, and net profit ₽117.7 billion. Gazprom Neft’s largest shareholder is Gazprom PJSC, which holds a 95.68 % interest, with the remaining shares in free circulation.