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. Last Updated: 07/27/2016

Gazprom, Rosneft Rush to Tap Arctic

Gazprom and state-run oil major Rosneft said Wednesday that they plan to accelerate exploration and development of five Arctic oil and gas fields that may need $35 billion of investment.

The companies agreed to complete construction of an ice-class drilling rig in 2004 and extract the first crude from the Prirazlomnoye deposit in 2005, the companies said in a joint statement after a meeting between Gazprom CEO Alexei Miller and his Rosneft counterpart, Sergei Bogdanchikov.

"The companies' heads agreed to speed up implementation of the gas projects," Gazprom and Rosneft said. "[We] will broaden talks with potential foreign investors on building a liquefied natural gas plant."

Gazprom, which supplies about a quarter of the gas consumed in Europe, plans to tap new fields to boost output by a fifth to a record 630 billion cubic meters by 2030. The company has held talks with ConocoPhillips, the third-largest U.S. oil company by sales, about building a $10 billion LNG plant and about tankers to ship the fuel to the United States.

France's Total SA, Norway's Norsk Hydro ASA, Finland's Fortum Oyj and India's ONGC Videsh Ltd. have expressed interest in some of the five projects. The projects are to explore the Shtokman, Prirazlomnoye, Kharampurskoye, Vyngayakhinskoye and Yetypurovskoye fields.

The five deposits hold estimated reserves of 6.1 trillion cubic meters of gas, enough to supply the globe for more than two years, and 2.8 billion barrels of crude, enough to supply Europe for almost six months.

The partners announced their plans to boost exploration after Rosneft on Tuesday agreed to swap some Arctic-based oil and gas assets with LUKoil, the country's top oil producer last year, to settle disputes about their ownership.

Rosneft agreed to hand LUKoil other oil assets in exchange for a 13.6 percent stake in Rosshelf, in which Gazprom owns 52.7 percent. Rosshelf had held licenses to the Shtokman and Prirazlomnoye fields before they were transferred last year to Sevmorneftegaz, a joint venture between Gazprom and Rosneft. LUKoil had opposed the transfer of those licenses.

Sevmorneftegaz, a joint venture between Gazprom and Rosneft, also plans to agree on construction of a drilling rig to tap the Shtokman field by no later than the end of September.

Gazprom and Rosneft are seeking $700 million in loans from ABN Amro Holding NV, the biggest Dutch bank, and state-owned Sberbank to complete the drilling rig for Prirazlomnoye, Prime-Tass reported last month.