Rosneft eyeing Seadrill stake

rosneft26 May 2014, News Wires – Russia’s state-owned Rosneft could buy a controlling stake in the world’s largest offshore driller, Norway’s Seadrill, after saying it was in talks to acquire a significant stake in Seadrill subsidiary North Atlantic Drilling.

The announcement comes as Rosneft and North Atlantic Drilling signed a co-operation agreement on Saturday, one of several deals announced by Russia’s largest oil company during the St Petersburg International Economic Forum, showing the keenness of multinationals to do business with Russia despite tensions over Ukraine.

In a statement revealing details of the pact, Seadrill said it would open the door for onshore opportunities in Russia for the harsh-environmnent drilling subsidiary while also giving it “contracts for multiple offshore assets”.

“In addition Rosneft will be acquiring a significant equity stake in North Atlantic Drilling,” the parent company stated.

Rosneft is expected initially to sign long-term contracts for as many as nine rigs, with a total duration of 35 rig years, as well as commit to future charters and newbuilds under the agreement, set to be finalised in the second half of 2014, according to the statement.

The partnership agreement involves developing Rosneft’s offshore and onshore projects until at least 2022.

The pact is a coup for Norwegian-born tycoon John Fredriksen, one of the world’s richest men, who controls Seadrill and North Atlantic Drilling, as it gives him access to the Russian exploration market on a large scale, Reuters reported.

Rosneft said in a statement on Saturday: “The agreement contemplates Rosneft acquiring a significant stake in North Atlantic Drilling Ltd with the latter entering Russia’s onshore drilling market, and signing of long-term contracts for onshore and offshore drilling.”

Rosneft provided no further details, but Interfax reported the deal could value North Atlantic Drilling’s capitalisation at roughly $2 billion.

Separately, Rosneft president Igor Sechin told the Rossiya 24 TV channel his company could take a stake of up to 50% in Seadrill over time, suggesting Fredriksen may further expand his reach in Russia.

“We’re becoming Seadrill shareholders. At this stage we’re discussing combining our service company RN Bureniye with Seadrill and handing it some of our orders. In time we could increase our stake to 50%,” Sechin was quoted as saying by the Interfax news agency.

Seadrill is the world’s biggest offshore oil driller by market capitalisation, ahead of Transocean. Fredriksen, nicknamed “Big Wolf” for his business instincts, is Seadrill’s largest shareholder with a stake of 24.54%.

Seadrill is the crown jewel in Fredriksen’s business empire, that ranges from shipping to fish farming.

North Atlantic Drilling specialises in drilling in harsh environments like the Arctic. Seadrill spun it off and listed it on the New York Stock Exchange in January. At the time, the initial public offering raised $125 million.

North Atlantic Drilling chief executive Alf Ragnar Lovdal said: “We have sought to access the growth opportunity represented by the Russian market for several years, and we are very pleased to have reached an agreement with Rosneft for this landmark transaction.”



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