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Rosneft-ExxonMobil partnership to help produce 90 bln brls of oil in Arctic

April 29, 2012, 5:10 UTC+3

Collaboration by Rosneft and ExxonMobil has been going on for 16 years

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MOSCOW, April 29 (Itar-Tass) —— Strategic partnership by Rosneft and ExxonMobil will help tap new oil and gas deposits in the Russian Arctic and in the future to extract up to 90 billion barrels of fuels a year, Russia’s ex-minister of fuel and energy, chairman of the Union of Oil and Gas Producers of Russia, Yuri Shafranik said.

In an interview with Itar-Tass this week he called "strategically correct" the alliance between the two countries' companies, providing for joint projects in the exploration and development of oil and gas fields in Russia in the Black Sea and the Kara Sea, as well as for sharing technology and expertise.

"Having the world's largest oil company (its investment in 2011 totaled 36 billion dollars and market capitalization, 401 billion) as a junior partner of Russian companies in the development of our ocean shelf in the Arctic is a truly impressive result," said Shafranik. In addition, he recalled that Rosneft would get shares in three North American projects, and two subsidiaries of Russian companies signed pacts to acquire 30 percent of the share of ExxonMobil in West Texas and in Canada."

Speaking about the situation in Russia, he admitted that "the domestic fuel and energy sector does not yet have the necessary capacity for the development of the Arctic oil fields on its own.” Nor does it have the time to explore them, he added.

"If our oil companies are too late to start offshore development, the country will run the long-term risks of losing leadership in the global energy market," Shafranik warned.

"The joint venture of the state-controlled (which is extremely important) Russian oil giant OAO Rosneft and ExxonMobil, according to the partners themselves, may eventually produce oil and gas resources totaling approximately 90 billion barrels of the oil equivalent," continued Shafranik. "This figure is truly impressive."

At the same time Shafranik, an advocate of foreign investment in Russia said that "any strategically significant project in any industry in our territory must be carried out with our controlling interest in the broad sense."

Collaboration by Rosneft and ExxonMobil has been going on for 16 years. Among the main joint projects are Sakhalin and creation of Russia's first plant to produce liquefied natural gas. "These are ambitious projects, and they helped test broader strategic cooperation," said Shafranik. "To reduce partners’ current Arctic risks the Russian government is reducing taxes on such important and complex projects."

The long-term agreement on strategic cooperation between the two companies was signed in August 2011. In April this year, the sides signed several additional agreements that provide the basis for the joint venture created to develop subsoil in the Kara and Black seas and regulate the implementation of investment projects by partners on the Russian shelf with an estimated cost of the initial phase of exploration of more than 3.2 billion dollars.

According to the Russian company, exploration work began in the Tuapse license area in September 2011. The agreed program for seismic surveys is 70 percent completed, it is expected to be finalized in the second quarter of 2012. The drilling of the first exploration well is due in 2014-2015.

In the Kara Sea seismic surveys and assessment of the environmental impact on the East Prinovozemelsky sites are to be carried this year. The drilling of exploration wells is scheduled to begin in 2014.

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