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U.S. energy behemoth ExxonMobil Corporation (XOM - Analyst Report) and Russian state-owned company OAO Rosneft have agreed upon a joint venture for assessing the prospect of commercial production of light oil reserves at the Bazhenov and Achimov reservoirs in Western Siberia.

The group will set up a pilot plan and ExxonMobil will have an equity stake of 49% while Rosneft will hold the remaining 51% interest under the venture. The activities will be across Rosneft’s 23 license blocks that span over 10,000 square kilometers.

Russia’s biggest oil producer − Rosneft − will offer its workforce and its infrastructure, while ExxonMobil will pitch in with $300 million for the pilot agenda besides providing state-of-the-art technologies and specialists in geology, development and well engineering and completion. The U.S. major will also facilitate production management services for drilling activates.

The ExxonMobil-Rosneft strategic alliance is endowed with the capabilities to fully evaluate and potentially develop this huge tight oil resource in North America and elsewhere.

In recent years, the U.S. energy behemoth has been busy tapping hydrocarbon deposits in shale rock formations. An unconventional source of energy, tight oil is similar to shale deposits and is locked in rock formations that must be cracked open to exploit oil reserves. Over the past few months, Eni SpA (E - Analyst Report) and Statoil ASA (STO - Analyst Report) along with other Russian companies have also shown interest in the development of Arctic fields.

Meanwhile, ExxonMobil and Rosneft have signed a declaration relating to environmental protection during their oil and gas exploration venture in the Russian Arctic Continental Shelf.

The declaration elaborates on the measures to be taken to protect the ecosystem of the Arctic region during the exploration and development phase. The parties involved intend to set up a coordination center to supervise the protection of biodiversity while carrying out exploration and development projects in these remote and ecologically sensitive regions. They will strictly adhere to the standards set up by IPIECA, the global oil and gas industry association for environmental and social issues.

ExxonMobil has a Zacks Rank #3, which translates into a Hold rating for a period of one to three months. For the long term, we maintain a Neutral recommendation on the company.

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