Moscow (Platts)--18Dec2012/922 am EST/1422 GMT

Russia's largest crude producer Rosneft has signed a cooperation agreement with Italian refiner Saras to establish a 50:50 joint venture for trading, crude processing and the sale of oil products, the companies said Tuesday.

No financial details of the deal were provided, however, and it was not clear which assets or equity that the company's would contribute to the new downstream venture.

"The joint venture is meant to allow the parties to capitalize on their respective upstream and downstream positions, focusing around Rosneft's unique access to crude oil and other feedstock, and Saras' supply and trading opportunities around the Sarroch refinery," the Saras statement said.

Saras' 300,000 b/d Sarroch refinery on the Italian island of Sardinia accounts for approximately 15% of Italy's total refining capacity, according to the company.

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A Rosneft spokeswoman declined to comment on what assets Rosneft may add to the joint venture, describing the deal as "an initial agreement on forming a joint venture, not a document establishing it."

Rosneft and Saras also intend to "enter and develop new oil product markets and activities to complement the existing marketing channels of Saras," Saras said.

Saras was not immediately available to comment further on the deal.

ACCESS TO CRUDE

In September the companies agreed to set up a working group to review joint commercial opportunities, as Saras looked to secure long-term crude supplies for Sarroch.

At the time, the Italian refiner also said it was is considering selling a stake in the company to a major oil producer as part of a deal to secure long-term crude supplies.

Credit Suisse said it sees the deal as positive for Saras, which has been clear for some time that any deal or venture would only be done at "reasonable terms."

"The JV is meant to allow the parties to capitalize on their respective upstream and downstream position, focusing on Rosneft's access to crude oil and other feedstock, and Saras' supply and trading opportunities around the [300,000 b/d] Sarroch refinery in the Med," Credit Suisse said in a note.

A move to sell a stake in Saras would see the Italian refiner follow the same strategic direction as its domestic rival ERG, which began cutting its stake in the ISAB refinery in Sicily four years ago when it sold a 49% stake to Russia's Lukoil.

ERG has gradually reduced its stake in ISAB since then and has an option to sell the remaining 20% in ISAB to Lukoil by the end of next year.

The memorandum of understanding was signed in Munich on Saturday by Saras chairman Gian Marco Moratti and Rosneft CEO Igor Sechin, the Rosneft statement said.

Rosneft, Russia's largest oil producer, produced 122 million mt (2.4 million b/d) of crude in 2011.

--Rosemary Griffin, rosemary_griffin@platts.com
--Robert Perkins, robert_perkins@platts.com
--Edited by Jonathan Fox, jonathan_fox@platts.com

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