France's Total, Europe's third-largest oil company, agreed to pay $4 billion for a 12% stake in Russia's OAO Novatek in a bid to enter the competition for energy reserves in Russia's area of the Arctic Circle. As part of the deal, Total will join the Yamal liquefied natural gas consortium.
Total (TOT) said it will increase its stake in Novatek to 19.4% in three years. Russia, the world's top energy producer, is looking to expand its partnerships with Western oil majors in an effort to extract more oil resources from the Arctic region.
Earlier this year OAO Rosneft, Russia's top oil company, and BP (BP), Europe's second-largest oil company, announced a $16 billion share swap that will see the two companies partner to explore for oil in the Arctic Circle.
Total will gain access to equity production of 120,000 barrels of oil equivalent a day and about 1 billion barrels of proved and probable reserves, and appoint a director to Novatek's board, Bloomberg News reported, citing Total's statement. The deal is expected to be finalized in the first half of this year.