Repsol YPF S.A. has entered into a joint venture (JV) agreement with Alliance Oil Company to concentrate on exploration and production projects in Russia, a leading hydrocarbon producing nation. However, the deal is subject to the final negotiations on contractual terms, due diligence and regulatory approval.
Under the terms of the agreement, Alliance will take 51% share of the JV and facilitate producing assets in the Volga-Urals region, leaving the Spanish oil company Repsol with the remaining 49% stake. Although Repsol aims to make initial investments for future growth projects, it did not indicate any monetary value.
Repsol seeks to make the most of its experience and technical expertise along with Alliance Oil's acquaintance with and special access to Russian exploration and production ventures for long-term gains. Additionally, the deal provides Alliance with exploration and growth opportunities.
Repsol already holds a 3.47% interest in Alliance Oil following its merger with West Siberian Resources in 2008. Additionally, the Spanish company also holds 74.9% share in Eurotek-Yugra, which has exploration and production licenses in the Karabashsky-1 and 2 blocks in Western Siberia.
Alliance is a Swedish listed company and is controlled by the Bazhaev family. It is a part of the OAO Alliance group that has the majority of its operations in Russia with a few in Kazakhstan. It controls Russia's Khabarovsk oil refinery, which has got the annual crude throughput of 4 million tons, owns 24 tank farms and more than 250 pump stations in the Far East.
Repsol is Spain’s largest integrated oil and gas company. Its wide footprint in Latin America yields the majority of operating earnings for the company with Argentina comprising the largest share of the pie. We believe the Alliance-Repsol union will facilitate Repsol to gain access in the largest hydrocarbon reserves in the world. The company has been very active on the exploration front in the last couple of years, giving way to some of the world's largest oil and gas finds in the period.
Repsol is also investing in exploration activities in Brazil’s offshore Santos Basin with partners, China Petroleum & Chemical Corp., aka Sinopec (SNP) and Petroleo Brasileiro S.A. or Petrobras (PBR) while making significant advancements in its divestment of YPF.
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