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Rosneft takes control of Sinopec Sakhalin JV

Russian state oil firm Rosneft has taken control of a joint venture with China's Sinopec based on Russia's Pacific oil hub, Sakhalin Island, Rosneft said on Thursday.

OAO Rosneft said in a statement that the two companies signed an operating agreement governing their Sakhalin-3 Veninsky oil project earlier this week. Rosneft will hold 74.9% of Venin Holding Ltd. but finance only 25% of the firm's spending, while Sinopec will hold 25.1% - enough to block board decisions - and will fund 75% of the expenditure. Previously Sakhalin Oil Company, owned by the regional government, also had a 25.1% stake in the venture, while Rosneft only had 49.8%.

Rosneft did not say how much it had paid to acquire the stake. A Rosneft spokesman had no information about the deal. Rosneft said total investment in the project, based on Sakhalin Island in Russia's Far East, stood at $69.8 million at the start of this year. Venin Holding Ltd. is the sole shareholder in the operating firm Venineft, which has so far drilled one well on the 5,300 square km block using a rig belonging to the Shanghai Offshore Drilling Company. Rosneft said upcoming plans included a second exploratory well at the Severo-Veninsky structure and a third well at one of the structures in the Aiyashskaya group, where the first well confirmed the presence of hydrocarbons.

Rosneft estimates the field's reserves at 169.4 million tons of oil and 258.1 billion cubic meter of gas. Rosneft and Sinopec agreed to jointly explore the block during a visit by Chinese President Hu Jintao to Moscow in July 2005. It became China's first energy project in Russia. Rosneft said the latest agreement was signed on March 26, during Hu's third visit to Moscow. (reuters.com)