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Sinopec Joined Sakhalin-3 Operators

Rosneft said it was decided to set up a joint venture for the purposes of geological survey of Veninsky fields

Chinese Sinopec gets a blocking stake in the joint venture that will make geological survey of Veninsky fields, Sakhalin-3 project, Rosneft announced October 12, 2005. In return, Sinopec will bear the better part of the project costs, meaning all costs related to the survey and at least half of costs at development stage, the Russian business daily Kommersant reported.

Rosneft said it was decided to set up a joint venture for the purposes of geological survey of Veninsky fields, where Sinopec will hold a 25.1 percent; Sakahlin Oil Co. - 25.1 percent; Rosneft - 49.8 percent.

Veninsky fields have 114 million tons of crude and 315 bcm of gas in forecasted reserves. Rosneft obtained the geological survey license in April 2003.

The analysts signal Rosneft may apply the pattern of Sakhalin-1 to Sakhalin-3. In Sakhalin-1, Indian ONGC undertook to cover Russia?s portion of project funding in exchange for the 20 percent interest in the undertaking. Rosneft pledged then to pay back from profit generated from crude/gas sales once commercial production of hydrocarbon begins.

The auctions for remaining fields of Sakhail-3 are expected in late 2005 or early 2006. Gazprom in tandem with LUKOIL, as well as Rosneft and some foreign companies have expressed their interest in the fields. Nevertheless, ExxonMobil, which had won the auctions for the fields far back in 1993 (the results were annulled some time later) is in no mood to surrender and hopes to agree with the government of Russia on the issue.