Statoil and Rosneft signed the shareholders and operating agreement for a joint venture (JV) to assess the feasibility of commercial production from the Domanik shale formation on December 6, 2013, according to Statoil.

The document was signed by Igor Sechin, president of Rosneft, and Statoil CEO Helge Lund. This is another significant step forward following the heads of agreement for shale oil cooperation signed in June 2013.

“[This] 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,” Lund said.

“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,” Sechin said.

The companies will set up a JV company to run a 3-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, according to Statoil.

In accordance with the agreement, Statoil will provide carry-based funding to perform the pilot survey program in 12 license 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 license blocks in the Samara region for commercial development, according to Statoil.