OREANDA-NEWS. September 28, 2007. JSC Tatneft (Tatneft) and Shell Exploration Company (RF) B.V. (Shell) concluded Agreement on Principles of Strategic Partnership. The agreement was signed by General Director of Tatneft Shafagat F. Takhautdinov and Shell Country Chairman in Russia Chris Finlayson in the presence of R.N. Minnikhanov, Prime Minister of Tatarstan and Chairman of the Board of Directors of Tatneft.

Under the terms of the agreement, the two companies will devise a program for heavy oil development in Tatarstan. They will conduct a feasibility study and assess technologies for extraction and processing (upgrading) of heavy oil, which is part of existing exploration and production licenses held by Tatneft.

This agreement opens the door to other potential joint activities, including the acquisition of new licenses for hydrocarbon exploration in Tatarstan and elsewhere in Russia.

As part of the agreement, Tatneft and Shell will consider establishing a joint venture or using other forms of cooperation.

Commenting on the agreement Shafagat F. Takhautdinov said: "The oilmen of Tatarstan celebrated the production of three billion tonnes of oil this year. We are confident that production of the heavy oil will give a new impetus to the development of the oil-producing industry in Tatarstan and will enable us to make significant strides toward reaching a level of four billion tonnes of oil production in our Republic. Tatneft has 30 years of experience in heavy oil (bitumen) development in Tatarstan and has tested multiple technologies during this period. Cooperation with Shell, which is known for its advanced technologies for development of heavy oil worldwide, will combine experience accumulated by both companies and will become an important step in implementing this project".

Chris Finlayson said: "Shell has long been at the forefront of developing new technology to extract and process heavy oil. In a variety of places where we operate -- including the USA, Canada and Oman -- our production techniques are opening up vast energy resources. We look forward to our cooperation with one of Russia's largest oil and gas companies and hope that this partnership will build Tatneft's position as a leader in heavy oil development in Russia".