The Commission on Foreign Investments Monitoring of the Russian Government has postponed for three months its decision on the formation of a joint venture between Gazprom Neft, a Russian oil company, and Royal Dutch Shell, a global oil major, said Igor Artemyev, head of the Federal Antimonopoly Service (FAS) of the Russian Federation. The new joint venture was set up to develop license blocks of Meretoyakhaneftegaz, Gazprom Neft subsidiary, in Yamalo-Nenets Autonomous Okrug. As Meretoyakhaneftegaz’s licence blocks qualify as reserves of ‘federal significance’ under the Russian law on subsoil resources, the approval of the Government Commission is required for the deal to be closed.
Gazprom Neft’s oil field in Yamalo-Nenets Autonomous Okrug. Image credit: Gazprom Neft
“After reviewing the deal and its structure the Commission has decided to postpone the decision for three months as some of its technical and economic aspects are not fully clarified yet. The respective requests have been sent to both Gazprom Neft and Royal Dutch Shell, so the companies can work on these aspects and finalise them on a technical level. Then the Commission will review the deal again. The chances for the deal to be approved are high,” says Igor Artemyev.
Gazprom Neft and Royal Dutch Shell signed the Sale and Purchase Agreement for a 50% interest in the authorised share capital of Meretoyakhaneftegaz on 6th June 2019 during St. Petersburg Economic Forum.
Meretoyakhaneftegaz currently holds licencing rights to the Meretoyakhinskoye oil field. Several license blocks, including the Tazovsky and Severo-Sambrugsky, as well as two Zapadno-Yubileiny blocks in Yamalo-Nenets Autonomous Okrug, will be automatically transferred to the JV’s asset portfolio as soon as the transaction is closed. Total resources in place at fields to be owned by Meretoyakhaneftegaz is estimated at about 1.1 billion tonnes of crude oil.
Mr Artemyev has also confirmed, that according to the agreement, Royal Dutch Shell would pay Gazprom Neft 9.3 billion Russian rubles (approx. $145 million) for its shares and invest up to 100 billion rubles (approx. $1.56 billion) in this project.
Igor Artemyev, head of the Federal Antimonopoly Service (FAS) of the Russian Federation. Image credit: FAS
The Government Commission on Foreign Investments Monitoring oversees foreign investment in legal entities that have strategic importance for national defence and state security. In the oil and gas industry, the Commission’s approval is required for all the deals with licence blocks ‘of federal significance’, which according to the Federal Law on Subsoil Resources hold extractable reserves exceeding 70 million tons of oil or 50 billion cubic meters of natural gas.