HAVANA, August 2 (Itar-Tass) — Russia’s Gazprom Neft has completed a deal to join the project in the exclusive economic zone (EEZ) of Cuba in the Gulf of Mexico, the company said in a press release here. A Supplementary Agreement to the Production Sharing Contract (PSC) on four blocks in the EEZ was signed in Havana of July 29, 2011 by Gazprom Neft, the Cuban national company Cubapetroleo and Malaysian national oil company Petronas.
According to the document, Gazprom Neft has become a full-fledged participant in the PSC, getting a 30-percent stake in the project, Petronas reserves 70 percent. In early July, after obtaining the approval of public authorities of Cuba, Gazprom Neft and Petronas signed a Deed of Assignment of the share in the project. The two sides also concluded a Joint Operating Agreement that defines the basic principles of teamwork, procedures and mechanisms for making key decisions. Thus, the Russian company has completed its entry into this major international project.
“This partnership with Petronas will help Gazprom Neft to enforce its competence in the sphere of deep water development and expand its expertise in projects outside of Russia. By 2020 we plan to have about 10 percent of our overall production from overseas projects,” Alexander Dyukov, Chairman of Gazprom Neft Management Board was quoted in the release.
“This is a new word in our cooperation with Cuba in the energy sector, and the participation of Gazprom Neft in the project gives more opportunities for joint work for prospecting and production of energy resources in Cuba’s exclusive zone,” Russian Ambassador to Cuba Mikhail Kamynin said in an interview with Russian journalists. Secretary of the Advisory Commission of Cuban EEZ Manuel Marrero for his part stressed the importance of the presence of “a powerful Russian oil company” in the deepwater area of the EEZ of Cuba.
“We hope that after the first (oil) detection jointly with Petronas Gazprom Neft’s appetite will awaken, and the company will start to discuss with Cubapetroleo activity at new blocks, in the zones that are so far available for foreign companies,” Marrero said, adding that the Malaysian company will begin drilling the first well in the deepwater area of the EEZ in early 2012.
The Cuban authorities opened the EEZ in the Gulf of Mexico in 1999, dividing it into 59 blocks, each of which can be chosen by a foreign investor for exploration and subsequent development of fields. Several foreign companies, including Spanish-Argentine Repsol IPF, Venezuelan Petroleos de Venezuela and Vietnamese PetroVietnam, are currently working there. According to estimates of Cuban experts, EEZ can contain oil deposits totalling some 20 billion barrels.
The PSC provides for exploratory works and in case of commercial discovery of hydrocarbons the production of hydrocarbons in the deepwater blocks No 44, 45, 50 and 51 of the Exclusive Economic Zone of the Republic of Cuba in the Gulf of Mexico. The Production Sharing Contract was signed in 2006 between Petronas and the Government of the Republic of Cuba.
In October 2010, Gazprom Neft and Petronas signed the Farm-out Agreement and the Heads of Joint Operations Agreement. Financing of the project shall be done pro rata of the participating interest of the parties. Based on the results of the first exploration well, the parties will decide on the further steps for the project. Apart from Cuba, Gazprom Neft participates in international exploration and production projects in Iraq, Equatorial Guinea, Venezuela and – through its Serbian affiliate company NIS – in Angola, Romania and Hungary.
Gazprom Neft is the fifth largest oil producing and refining company in Russia. It’s the oil arm of Gazprom, which owns 80 percent of Gazprom Neft’s shares.
Gazprom Neft’s central office is located in Moscow; however, the company is already registered in St. Petersburg where it also has an office. Upon the completion of their new office building, known as Gazprom City in St. Petersburg, Gazprom Neft is going to move its headquarters to Saint Petersburg in the near future. It is currently the largest employer in Omsk and Noyabrsk. Gazprom Neft was created under the name Sibneft in 1995 by Presidential Decree No. 872, issued on 24 August 1995. A government resolution was signed on 29 September, and the State Property Committee on 11 October ordered that the state’s shares in oil producing enterprise Noyabrskneftegas, the Omsk Refinery, exploration enterprise Noyabrskneftegasgeophysica and marketing company Omsknefteprodukt all be transferred to Sibneft. In September 2005, Russia’s largest corporate takeover occurred when Gazprom bought 73 percent of Sibneft’s shares for US$13.1 billion. Later, Sibneft was renamed Gazprom Neft.