Russia’s Rosneft and Japan’s Inpex Corp. have signed a cooperation agreement that will see them jointly explore frontier licenses in the Russian Far East’s Sea of Okhotsk, to the north of the producing Sakhalin area.

The companies will explore the Magadan-2 and Magadan- 3 blocks that lie in sub-Arctic waters. Estimated recoverable resources of the two blocks stand at 1,577 MM tonnes of oil equivalent (11.3 Bn boe).

The agreement, signed by Igor Sechin, Rosneft President and Chairman of the Management Board, and Toshiaki Kitamura, President and CEO of Inpex, envisages cooperation between the companies in setting up a joint venture to explore the blocks. Inpex will hold a 33.33% stake.

Final agreements are expected to be signed by the end of this year, with Inpex to fully finance geological exploration work in line with approved programs. It has also been agreed that Inpex will reimburse the blocks’ development expenses incurred by Rosneft, as well as 33.3% of a one-off payment made by the Russian company during the course of the licence acquisition.

Furthermore, the agreement provides for non-recurrent bonuses to be paid by the Japanese company to Rosneft for each commercial oil and gas discovery proportionally with its stake in the project.

The Magadan-2 and Magadan-3 blocks are in the northern part of the Sea of Okhotsk and feature water depths of between 120–180 m (394-591 ft).