OREANDA-NEWS. JSOC Bashneft and OJSC Lukoil have established a new joint venture (JV), LLC Vostok NAO Oil Company, to conduct geological exploration and prospecting and produce hydrocarbons at the companies' license areas in the Nenets Autonomous District.

'We welcome greater cooperation with Lukoil. Successful development of the Trebs and Titov fields in the Nenets Autonomous District has proved that this cooperation is effective,' commented Bashneft's President Alexander Korsik. 'Establishment of a new joint venture is fully consistent with our strategy for expanding the resource base; it will enable the Company to share geological risks and gain an additional cost advantage when implementing the project, including by minimizing expenditure on construction of infrastructure.'

'I am confident that cooperation between Lukoil and Bashneft in a new area will be just as successful as our joint venture developing the Trebs and Titov fields,' said Vagit Alekperov, President of OJSC Lukoil. 'Our experience suggests that both companies aim for mutually beneficial cooperation in the interests of our shareholders that would promote the development of the country's fuel and energy sector.'

The joint venture, whose members, JSOC Bashneft and LLC Lukoil-Komi, have equal stakes, has been registered in the Nenets Autonomous District. Pyotr Oboronkov, General Director of LLC Lukoil-Komi, has been appointed to a similar post in Vostok NAO. Bashneft's representative Dmitry Dedanin will serve as finance director of the JV.

In accordance with the Agreement of Members of LLC Vostok NAO Oil Company, Bashneft will transfer the subsoil licenses for the Vostochno-Padimeyskiy, Nyarioyakhskiy, Savatinskiy, Sabriyaginskiy and Yangareyskiy license areas to the JV, while LLC Lukoil-Komi will transfer the rights for the Verkhneyangareyskiy and Severo-Yareyaginskiy license areas. The companies acquired these licenses at auctions in October 2011 and in February 2012.

Taking into account the cost of licences for oil prospecting, exploration and production at the areas acquired by the members of the JV, Lukoil-Komi will make a contribution to the additional paid-in capital of LLC Vostok NAO Oil Company.

The Agreement of Members also regulates transportation of oil produced by the JV on an arm's length basis via the Varandey oil export terminal owned by OJSC Lukoil and situated on the coast of the Barents Sea.

Currently, the founders of Vostok NAO are conducting geological exploration at the above-mentioned areas under license agreements. The joint exploration and appraisal programme, which covers the seven license areas through 2017, includes 2D seismic surveys amounting to 1,100 linear kilometres and 3D seismic surveys covering 2,300 sq. km, envisions investments of approximately RUB 5 billion. Exploration drilling is scheduled to begin in 2016. It is expected that a decision on commercial development of the areas may be made in 2018, after the first stage of geological exploration has been completed.