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Rosneft, Eni to jointly explore oil-rich Arctic

MOSCOW (AP) -- Rosneft, Russia's largest oil producer, and Italy's Eni signed a deal Wednesday to jointly explore for oil and gas in Russia's Arctic.

The deal, which follows a similar agreement between Rosneft and U.S. energy giant ExxonMobil, calls for the two companies to invest up to $125 billion in their venture.

Eni and Rosneft struck the deal on Wednesday in the presence of Prime Minister Vladimir Putin, who returns to the presidency on May 7.

The Eni-Rosneft agreement looks modest compared to the Exxon-Rosneft deal. The two deposits in the Barents Sea, plus one deposit in the Black Sea, are estimated to contain a total of 36 billion barrels of oil equivalent — far less than the 85 billion barrels that Rosneft and Exxon hope to find at their Arctic fields.

Like the Exxon deal, Rosneft's agreement with Eni concerns hard-to-tap reserves and plans many years down the road. Rosneft said in a statement on Wednesday that they don't expect to drill the first exploration well before 2020.

Under the deal, Eni will take 33 percent in the joint venture in exchange for an invitation to join some of its overseas projects. Russian news agencies quoted Eni's chief operating officer for exploration and production Claudio Descalzi as saying that the Italian company is discussing potential projects in North Africa, the United States or northern Europe with Rosneft.

Rosneft CEO Eduard Khudainatov told Russian news agencies that the companies expect to spend $2 billion on exploration and invest up to $125 billion in the project.

Khudainatov said in the statement that the Eni deal "will help boost the two companies' resource base and capitalization."

Rosneft was up 0.4 percent in early evening trading on Moscow's MICEX-RTS stock exchange.