Eni and Rosneft team up to tap oil fields in the Russian Arctic

City A.M. Reporter
ROSNEFT and Eni signed an agreement yesterday in the presence of Russian Prime Minister Vladimir Putin to jointly tap fields in Russia’s Barents and Black Sea zones, in Rosneft’s second Arctic deal in two weeks.

The deal may not yield commercial oil production for years, but for Eni it secures a foothold in an untapped and strategically important new province, and for Russia, it brings in the capital needed for long-term projects to keep its oil flowing.

Russia is facing declining output at Soviet-era oilfields and, dependent on energy for over half its revenue, Putin’s government has recently redoubled efforts to bring in foreign investment. In the six weeks since he won the presidential election, Putin has approved sweeping tax breaks to attract foreign investors to develop new offshore fields, and presided over an Arctic drilling deal between Rosneft and US ExxonMobil.

Eni, which had a commercial relationship with the Soviet energy industry and started producing gas here last week in a joint venture with two Russian companies, has said “giant projects” in Russia are key to plans to boost overall output.