Gazprom and Surgutneftegaz sign oil production deal

Russia's gas monopoly Gazprom signed an agreement giving the country's third largest oil firm Surgutneftegaz access to oil reserves on its giant Western Siberian gas field. The world's largest gas producer said the two firms agreed to set up a joint venture to develop oil and gas condensate reserves of the mammoth Urengoy field.
Urengoy, one of the world's biggest gas discoveries, began production decades ago and now faces declining gas output. It still holds several hundred millions of barrels of oil and gas condensate reserves.

Gazprom has accumulated a debt of over $ 15 bn over the last few years and keeps borrowing heavily to finance costly exploration to maintain its gas output and build new export pipelines. The gas monopoly, which produces 530 bn cm of gas a year and 200,000 bpd of crude oil, has said it wanted to boost oil production but would need the help of cash-rich domestic and international majors.
Surgutneftegaz produces 1 mm bpd in Western Siberia and has been severely criticised by investors for the lack of a clear expansion plan and its inability to profitably use its spare cash of more than $ 5 bn. The two sides will evaluate Gazprom's earlier investments in Urengoy oil and gas condensate reserves exploration before dividing the stakes in the joint venture.