GE (NYSE: GE) and Rosneft, one of the world’s leading oil companies, signed a strategic agreement to establish a joint venture focused on developing local expertise and technology solutions for the growing oil and gas sector in the Russian Federation. The agreement, which will strengthen both GE and Rosneft manufacturing and commercial capabilities, is part of GE’s plan to invest $1 billion in the oil and gas industry in Russia by 2020.
GE Chairman and CEO Jeff Immelt and Rosneft Management Board President and Chairman Igor Sechin signed the strategic cooperative agreement at the St. Petersburg International Economic Forum 2013.
GE Chairman and CEO Jeff Immelt said: “GE is proud to collaborate with Rosneft, the world’s biggest public oil company, and help continue efforts to modernize its industrial infrastructure. GE is committed to delivering local and leading-edge technological solutions to our customers that drive productivity and growth, and in Rosneft we have a strong partner. We are confident that GE’s participation in the large-scale projects, such as arctic offshore field development, will help development of Russia’s oil and gas industry.”
The agreement expands on the parties’ memorandum of understanding (MOU) signed in June 2012 and covers four main business activities:
- Monetizing Gas—turning natural gas into commercial products—including large- and small-scale liquefied natural gas (LNG), compressed natural gas (CNG) and gas-to-liquids (GTL).
- Refining gas and petrochemicals.
- Developing offshore and subsea technologies, including Arctic activities.
- Enhancing production, including the use of artificial lift technologies.
As part of the agreement, GE and Rosneft also will pursue two other key initiatives: the establishment of a Research and Development Center and an Application Engineering and Training Center in Russia. With their focus on technology innovation, these two centers will help both companies to sustainably grow the oil and gas industry.
In support of the goals of the new joint venture, a separate contract was signed for GE to supply two 77-megawatt 6F 3-series gas turbines that will provide reliable power for Rosneft’s largest production project at its Vankor oilfield in Siberia. The two gas turbines will be manufactured at a Russian Gas Turbines LLC facility in Rybinsk that is operated by a joint venture between GE, INTER RAO UES Group and Russian Technologies Corporation.
“Efficient and environmentally safe growth of oil and gas production is only possible provided that the latest technologies are used in the industry. We are convinced that the initiatives we intend to develop jointly with GE as part of our strategic cooperation agreement will contribute to the most efficient development of Rosneft fields both onshore and offshore with the use of the latest state-of-the-art technologies localized in Russia. We are pleased to secure cooperation with GE— one of the world leaders in developing and manufacturing of equipment for oil and gas industry,” said Rosneft Management Board President and Chairman Igor Sechin.
Ron Pollett, president and CEO—GE in Russia and CIS said, "We are proud that cooperation with Rosneft, marked by the signing of the MOU in 2012, successfully continues today. Today’s strategic cooperation agreement highlights GE’s commitment to the role of a strategic partner and supplier of reliable technologies for Rosneft as it actively develops national O&G infrastructure.”