20 June 2015 – Rosneft and EuroChem Mineral & Chemical Co, a subsidiary of EuroChem Group AG, (the “Parties”) signed a Memorandum of Understanding (the “MoU”) for the monetisation of hydrocarbon resources in the North-Eastern block of the East Urengoy licence area (the “Project”), being developed by Rospan International (“Rospan”), a Rosneft subsidiary. The MoU was signed by Igor Sechin, Chairman of the Rosneft Management Board, and Dmitry Strezhnev, EuroChem CEO, at the St.Petersburg International Economic Forum.
Under the MoU, the Parties intend to cooperate on the monetisation of hydrocarbon resources within the North-Eastern block of the Rospan East Urengoy licence area using EuroChem’s gas production facilities which are in close proximity to this licence area. Commercial contracts are expected to be signed for a 10 year period, with first gas shipments of 400 mcm scheduled for 2018.
Commenting on the MoU, Igor Sechin, Chairman of the Rosneft Management Board, said: “EuroChem is not only one of our major gas buyers but also a strategic partner. Today, we agree to cooperate further with the joint-development of neighboring gas fields. The close proximity of our licence areas provides us with the opportunity to optimise asset performance through the joint implementation of hydrocarbons and transportation projects and the refining, construction and operation of transportation infrastructure. With the signing of today’s MoU, we look forward to a long-term cooperation for mutual benefit.”
Dmitry Strezhnev, CEO of EuroChem added: “This new level of cooperation with Rosneft will help both our companies to streamline their resources. Under this MoU, EuroChem will be able to utilise its current gas production capacity in full, while Rosneft will be able to speed up the development of its gas reserves with less investments. The MoU also allows for further cooperation in oil production and transportation as well as infrastructure sharing, which will provide efficiency gains. I am confident that EuroChem will serve as a reliable partner to Rosneft during the implementation of this important Project.”
Notes for editors:
EuroChem Mineral & Chemical Co manages EuroChem Group AG assets in Russia. EuroChem Group AG is a leading global agrochemical company, producing primarily nitrogen and phosphate fertilizers, as well as certain organic synthesis products and iron ore. The Group is vertically integrated with activities spanning from mining and hydrocarbons extraction to fertilizer production, logistics, and distribution. EuroChem is currently developing two sizeable potash deposits in Russia with its VolgaKaliy and Usolskiy Potash greenfield projects. Headquartered in Zug, Switzerland, the Group operates production facilities in Belgium, Lithuania, China, Russia and Kazakhstan and employs more than 22,000 employees globally.
ZAO Rospan International, a Rosneft subsidiary, was the first company to start the development of the Achimov gas condensate and oil deposits. The company has been producing gas and condensate from the East Urengoy and Novy Urengoy licence areas (Yamalo-Nenets Autonomous District) since 1996.
The total reserves of hydrocarbons at these licence areas are estimated at approximately 1 tcm of natural gas, 150 million tonnes of gas condensate and 46 million tonnes of oil.
Rosneft is planning to increase Rospan’s gas recovery to 5.6 bcm in 2016 and to 18.4 bcm in 2018, according to the integrated project for the full-scale development of the Novy Urengoy and East Urengoy licence areas. Within the scope of the project, the company expects to drill and equip 275 exploitation gas condensate and 19 oil wells, construct complex gas treatment plants, a condensate stabilization unit, an oil treatment unit, a railway liquid bulk terminal, and significant amount of pipelines of different application.
Rosneft information division
tel.: + 7 (499) 517-88-97
EuroChem MCC Communications Department
tel.: +7 (495) 795-25-27 ext. 1440