Rosneft and Statoil have signed a shareholders and operating agreement for a joint venture to assess the feasibility of commercial production from the Domanik shale formation.

"The 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, the president of Rosneft, said.

The companies will set up a joint venture to run a three-year pilot program and assess the potential for commercial production. Rosneft will have a 51 percent equity interest and Statoil will have 49 percent.

The move follows the introduction of tax breaks in Sept., under which a zero rate of MET will be applied to the Bazhenov, Abalak, Khadum and Domanik formations for 15 years.

"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," Statoil CEO Helge Lund said.