Statoil ASA (NYSE: STO) and Rosneft signed a shareholders and operating agreement Dec. 6 for a joint venture to assess the feasibility of commercial production from the Domanik shale formation in the Samara region of Russia.

The companies will set up a JV company to run a three year pilot program and assess the potential for commercial production. The JV will be established with equity interests of 51% for Rosneft and 49% for Statoil. Both companies will contribute with technology and professionals into the JV.

In accordance with the agreement, Statoil will provide carry-based funding to perform the pilot survey program in 12 licence blocks. The pilot program will include data acquisition, and the drilling and hydraulic fracturing of pilot wells.

Upon completion of the pilot program, Rosneft and Statoil will jointly select licence blocks in the Samara region for commercial development.

"Today’s agreement demonstrates the two parties’ commitment to jointly move forward in an attempt to unlock the hydrocarbon potential of the Domanik shale formation. If successful, we believe this could be a world class shale oil asset,” Helge Lund, Statoil CEO, said in the release.

“Participation of a reliable partner like Statoil and the use of state-of-the-art technologies will help us accelerate the launch of hard-to-recover reserves development which in the future will be positively reflected in Rosneft financial statements and will increase its shareholder value,” Igor Sechin, Rosneft president, said in the release.