Russia's Rosneft to buy a drilling business from IDS

MOSCOW: Rosneft is set to buy a drilling business from IDS Group, a letter to IDS staff seen by Reuters showed, as the Russian oil giant continues its push into oilfield services to help reduce costs.

The letter said Rosneft, using its Intellektualnye Sistemy affiliate, would take over or merge with telemetry specialist IDS Navigator, which helps operators guide drilling as a well progresses based on measurements communicated from below.

A source familiar with the matter confirmed the planned takeover of IDS Navigator and said Rosneft may go after other IDS assets as well. A second source close to the deal said Rosneft was interested to take over the entire group.

Neither the letter nor the sources said how much the IDS Navigator business will cost or how Rosneft plans to pay for it.

Rosneft, IDS and Intellektualnye Sistemy did not respond to requests for comments.

IDS was established in 2004 and is controlled by Russian businessmen Artur Dulgery and Gadzhi Gadzhiyev. Rosneft and Russian rivals Gazprom Neft and Lukoil are among its clients, according to the company's website.

Although not a major deal, the move is a sign Rosneft Chief Executive Igor Sechin is continuing his push into oil services, a process he started a few years ago after accusing private drillers of monopolising the market and costing too much.

Rosneft, the world's second biggest oil company by output after Saudi Aramco, runs its own oil services division, RN-Burenie, which has 267 rigs, but the company is also still placing orders with subcontractors.

The first source said IDS is one of Rosneft's main contractors at its prize Yuganskneftegaz asset in western Siberia which pumps 1.4 million barrels of oil a day, or a third of Rosneft's total production.

The latest move comes as Russia is preparing state support for oil firms to work on nearly 3,000 new wells which can be finished off when a global deal to cut oil supplies expires - so Moscow doesn't risk losing any market share.

It was not immediately clear whether the deal to buy IDS Navigator was part of Rosneft's strategy to prepare new wells.