BP bows out of two Russian oil and gas blocks held with Rosneft

UK supermajor BP has dropped two East Siberian onshore blocks from the scope of its Yermak Neftegaz exploration and development joint venture with Russian oil producer Rosneft.

Rosneft is now scheduled to take full control of Russian registered operator Srednelenskoye, which holds the exploration and development licences for the Middle Lensky and Olekminsky blocks in East Siberia's Yakutia region before the end of this year, according to the news agency Interfax.

Rosneft currently holds a 51% shareholding in Srednelenskoye, while BP is understood to have a 49% stake via its Russian subsidiary, BP Russian Investments, under the Yermak Neftegaz joint venture.

BP and Rosneft formed Yermak Neftegaz in 2016 soon after Rosneft completed the takeover of Russo-British oil producer TNK-BP.

The UK supermajor hoped to obtain access to large exploration plays through its alliance with Rosneft, in which it holds a direct 19.8% interest.

However, the venture was hit by changes in plans at both Rosneft and BP last year, with the Russian company opting to consolidate and prioritise potential greenfield developments in the country and BP increasing its investments in low-carbon and renewable energy projects.

At the end of last year, BP agreed to relinquish Yermak’s licences at two other blocks, Posoysky and Baykalovsky, which lie in East Siberia's Krasnoyarsk region.

The Baykalovsky block hosts Yermak’s sole discovery to date in Russia, following the drilling of an exploration well in 2018.

The Posoysky and Baykalovsky blocks eventually became part of the Vostok Oil project, which Rosneft has been advancing in recent months with Russian President Vladimir Putin and the government.

Rosneft currently holds a 90% stake in Vostok Oil, with the remaining 10% purchased last year by international commodity trader Trafigura in exchange for securing a steady flow of oil and oil products from Rosneft.

BP is understood to have turned down a proposal from Rosneft to take a minority stake in the project.

Yermak Neftegaz still retains licences for two West Siberia blocks, West Yarudeysky and Upper Kubinsky.

According to the company’s tender disclosure notices, its plan to spud a first exploration well at West Yarudeysky has been postponed from this year to the 2022-2023 winter.

The plan calls for drilling a vertical well to 3000 metres to test five anticipated pay zones.