BP turns to gas with new Rosneft deal

Rosneft and BP have signed an agreement to bring more natural gas into Europe and strengthen the partnership between both companies.

The two companies have agreed to develop integrated cooperation in gas and aim to jointly implement gas projects in Russia and abroad focused on gas exploration and production, LNG production, supply and marketing.

Rosneft and BP also reconfirmed their mutual interest in cooperation in European gas marketing. According to the memo, Rosneft and BP's wholly-owned subsidiary BP Gas Marketing Limited will enter into a long-term sales and purchase agreement for the supply of natural gas produced by Rosneft in order to ensure delivery of additional Russian gas supplies to European markets starting from 2019.

"Rosneft already is the largest independent gas producer in Russia and intends to further increase production levels in the coming years," Rosneft CEO Igor Sechin said. "Cooperation with BP would provide Rosneft with both a new efficient gas monetization channel and the conditions required for the development of a new resource base including hard to recover gas reserves."

Currently Gazprom holds exclusive rights for pipeline gas exports for Russia.

"Shifting to gas is one of the pillars of BP's strategy. It is important in order to meet the increasing demand for cleaner energy. Gas is a growing proportion of BP's portfolio and by the middle of the next decade we expect around 60% of our production to be gas, compared with around 50% today."

Europe relies on Russian gas for a third of all supplies, and demand is increasing due to dwindling reserves in the North Sea, reports the Telegraph.