Norwegian petroleum refiner Equinor buys 49% stake in Rosneft’s onshore oil venture

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Norwegian petroleum refiner Equinor buys 49% stake in Rosneft’s onshore oil venture

Late on Friday, Equinor, the Stavanger-based 48-year-old Norwegian multinational petroleum refiner, had issued a statement saying that the oil industry mammoth had purchased 49 per cent stake in Russia’s onshore petroleum assets from Rosneft for a stark upsum of $550 million, suggesting a surprise move that bolstered views the Russian state-backed oil supermajor had been vying to grapple with a pandemic-led downturn in crude oil demands amid a multi-year low oil prices.

Aside from that, Equinor had also stated at its statement that it had agreed to lay off $550 million for 49 per cent stake in a Rosneft subsidiary, KrasGeoNac LLC. that owns 12 traditional onshore production and exploration licenses in the eastern Siberia.

Nonetheless, despite an existing grudge between Oslo and Kremlin over offshore oil drilling on arctic waters, Equinor and Rosneft have been maintaining a strategically pivotal trade relationship since 2012 which had seen a large-scale transmutation of many Rosneft projects into JVs in several part of the transcontinental country.

Equinor purchases 49% stake in Rosneft’s Siberian subsidiary

Apart from that, Equinor had added on its Friday’s statement that one of the 12 KrasGeoNac LLC. onshore licenses in eastern Siberia, involved the North Danilovsky holdings that began its operation back in July this year and has been expected to reach a capacity to produce 40,000 barrels of oil per day by 2024 with additional plans to expand output to 70,000 barrels per day or nearly 0.1 per cent of the world’s entire production.

Nevertheless, referring to EU sanctions on oil exploration in Russia that covers Arctic and shale developments, an Equinor spokesman said in a statement later part of the day that the purchase would involve only onshore projects, therefore it would not be subject to Norway-backed EU sanction on oil exploration in Russia.

Meanwhile, adding that the deal, which both companies are expecting to complete by the third quarter of 2021, would nullify Equinor’s participation in activities in the Sea of Okhotsk, Equinor spokesman Erik Haaland said to the reporters following the announcement, “We drilled two wells a few years ago in that area and the results from those wells led us to prioritise other areas”.