Russian gas producer Novatek and state-run oil producer Gazprom Neft have formed a joint venture to develop the North-Vrangelevskiy license area in the Arctic.

The JV forms part of an agreement signed by the firms at the St Petersburg International Economic Forum (SPIEF) 2021.

The transaction follows the signing of a memorandum of understanding at the 2019 SPIEF to jointly develop Arctic assets.

Novatek said that the new JV will undertake a full range of activities involved in oil and gas prospecting, exploration, and development.

Under the deal, Novatek owns a 49% stake in OOO Gazpromneft Sakhalin, which holds rights for geological prospecting, exploration and development within the North-Vrangelevskiy licence area.

According to Gazprom Neft and Novatek’s joint assessments, the block holds considerable resource potential and is highly promising.

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The remaining 51% in Gazpromneft Sakhalin will be held by Gazprom Neft.

Novatek management board chairman Leonid Mikhelson said: “We are expanding our long term resource base to implement new projects in the Arctic Zone of Russia.”

On a parity basis, Novatek and Gazprom Neft plan to undertake exploration activity at the North-Vrangelevskiy license area located in the eastern part of the East Siberian Sea and the western part of the Chukchi Sea.

Gazprom Neft management board chairman Alexander Dyukov said: “The Russian Arctic Shelf has enormous, although yet not fully assessed, resource potential.

“But exploring and developing this demands major investment, which is why joint ventures are of the most effective models for offshore operations.”