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Exclusive: Russia's Rosneft to buy a drilling business from IDS - letter

MOSCOW (Reuters) - Rosneft ROSN.MM 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.

FILE PHOTO: An employee wears a helmet with the logo of Rosneft at the Achinsk refinery, which was acquired by Rosneft company in 2007 and currently processes West Siberian crude delivered via the Transneft pipeline system, in Krasnoyarsk Region, Russia July 23, 2018. REUTERS/Ilya Naymushin/File Photo

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 SIBN.MM and Lukoil LKOH.MM 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 2222.SE, 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.

Reporting by Olesya Astakhova; Additional reporting by Rinat Sagdiyev; Writing by Katya Golubkova; Editing by David Clarke

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