Last September, during the visit of ROH Moo-hyun, president of the Republic of Korea, to Russia, Rosneft and KNOS signed a memorandum of mutual understanding which said, in particular, about the sides' intention to jointly develop a portion of the Western Kamchatka shelf of the Sea of Okhotsk. The document provides for the sides' cooperation through the establishment of joint ventures. Meeting the terms of the memorandum, the Korean side carried out a number of special technical studies on the licensed area over the past period.
According to the press release, "the sides have agreed that, under the interim financial agreement, seismic exploration will be carried out in the licensed area of 60,000 square kilometers in 2005, and three exploration wells will be drilled till 2008.
Apart from this, the sides decided to set up a joint venture by the end of this year.
In the words of the Korean sides' representatives, KNOS gives special attention to its participation in the project for two reasons. The: first one is the area's geographic closeness to the Korean peninsular, and the second one - its substantial production potential.
Rosneft and KNOS hope that the development of hydrocarbon deposits of the Russian Kamchatka shelf will help stabilize oil supplies to the markets of Asia-Pacific countries and guarantee a stable energy balance in the region.
Expected reserves of the said portion of the Western Kamchatka shelf are estimated at about 900 million tons of conventional fuel in 26 promising structures.
In the opinion of Rosneft specialists, their project is comparable to the Sakhalin-1 and Sakhalin-2 projects. The first stage of operations underthe project is to take 2.5 years. Investments in geological prospecting operations provided by the project will amount to about $150 million. The Korean side is expected to finance geological prospecting operations till the start of commercial production. Rosneft will have the right to a certain portion of income immediately after the start of commercial production, without waiting for KNOS to recoup its expenses.