UPDATE 1-Chevron to get 1/3 stake in Rosneft JV -sources

* Rosneft will have close to 2/3 share in holding company

* Chevron may spend less than $1 billion on exploration

By Jessica Bachman

MOSCOW, July 7 (BestGrowthStock) – Chevron (CVX.N: ) will take a
roughly 30 percent stake in its Black Sea oil venture with
Russia’s largest oil producer, Rosneft (ROSN.MM: ), industry
sources said.

“The ownership structure will be around one-third Chevron,
two-thirds Rosneft,” a source familiar with the details of
project told Reuters.

Last month Chevron and Rosneft signed an agreement to
jointly explore and develop the Val Shatsky field on Russia’s
Black Sea shelf, a deep-water region that analysts say presents
major geological difficulties.

At the signing, Russia’s top energy official Igor Sechin
said initial exploration investment, to be financed by Chevron,
would amount to $1 billion [ID:nLDE65G1YJ].

A source who has seen the agreement papers, however, said
the figure was likely to be lower.

The U.S. company was not immediately available for comment.

Another source in the oil industry who is familiar with the
terms of Rosneft’s offer said that in his opinion a one-third
equity stake in the holding company was not commensurate with
the hefty investment outlays and the project’s high risk level.

The licence area of 8,600 square km (3,300 sq miles), in the
eastern part of the Black Sea, has a maximum depth of 2,200
metres (7,218 ft), which is considered difficult for deep water
drilling.

Other foreign oil companies looking to tap Russia’s vast
hydrocarbon resources have also had to make do with similiar
ownership structures for operations with Russian partners.

Rosneft gave China’s Sinopec, for example, a 25.1 percent
stake in its Sakhalin-3 project in the Far East.

Chevron’s Chief Executive John Watson underscored the issue
of speedy cost recovery with Prime Minister Vladimir Putin, who
presided over the signing ceremony between the companies.

TAX BREAKS

“It is a highly prospective area, it does have geological
risks and high costs. We will need to work closely with the
government to ensure that proper fiscal terms are in place to
allow this project to develop rapidly,” Watson said.

Russian oil industry profits are heavily taxed through the
mineral extraction tax and the oil export duty, but firms
operating difficult projects have in the past successfully
lobbied for tax breaks.

In July 2009, the Russian government scrapped the mineral
extraction tax for Black Sea shelf deposits until production
from the fields reaches 20 million tonnes, but the oil produced
remains subject to the export duty.

Last December the government lifted the export duty for oil
extracted at 22 remote East Siberian fields whose operators have
been burdened by high infracture development costs.

The export duty was re-introduced this month, albeit at a
lower level than mature fields, but firms developing costly
projects in other regions continue to lobby for similar breaks
at offshore projects.

Sechin said that reducing the export duty for the Black Sea
project had not yet been discussed.
(Reporting by Jessica Bachman; Editing by Melissa Akin and
Anthony Barker)

UPDATE 1-Chevron to get 1/3 stake in Rosneft JV -sources