Russia\'s Alliance Oil has reached agreement with Spain\'s Repsol to set up a joint venture for oil production in Russia, Kommersant business daily reported on Tuesday. Repsol, which has a 3.2 percent shareholding in Alliance Oil, will hold a 49 per cent stake in the joint venture while the Russian company will hold 51 percent. Alliance Oil is expected to contribute its assets in the Volga-Urals region to the joint venture while Repsol will pay $200 million in cash to the joint venture\'s equity and pay another $200 million to buy stock in the joint venture, the paper said. The two companies will also jointly explore for new oil deposits. Kommersant quoted Repsol Chairman Antonio Brufau as saying that cooperation with Alliance Oil would allow the company to boost production and gain access to new assets, while Alliance Oil said Repsol would provide know-how and technical support for the project. The deal will be finalized after the companies conduct due diligence of assets to be contributed to the joint venture and receive the necessary corporate and governmental approvals. Alliance Oil expects the procedures to be completed this year, the paper said. Alfa Bank analyst Pavel Sorokin told the paper the Volga-Urals assets of Alliance Oil include 2P reserves of 171.48 million barrels of oil equivalent, meaning the deal will increase the company’s capitalization to a value approximating to $3.50 per barrel, while currently the company’s shares are traded at $3.30 per barrel, compared to $2.50 per barrel for similar oil companies. Kommersant quoted VTB Capital analyst Svetlana Grizan said the joint venture with Repsol was a positive step for the Russian company due to its high leverage and the need for investment in its Khabarovsk oil refinery in the country\'s Far East. The newly-formed company could get new licenses for Russian deposits that are not of interest to state-run companies, she said.