Exxon confident of right to book Russian Arctic oil and gas reserves

28 September 2011 28 September 2011

LorieFuller31

Exxon has announced that it will be able to book oil and gas reserves that it finds in an Arctic and Black Sea partnership with Russia’s OAO Rosneft even though its Russian state run partner owns the licenses.

“We see this as one of the most prospective areas for exploration in the whole world. That is what is driving us. Access to new resources.” Glenn Waller, Exxon’s head of Russia, told reporters today at the Sakhalin Oil and Gas 2011 conference in Yuzhno-Sakhalinsk.

Exxon Rosneft Joint Venture

Exxon agreed to form a venture with Rosneft in August, pledging to spend $3.2 billion exploring for oil and gas in Russia’s Arctic Kara Sea and deepwater Black Sea.

Prime Minister Vladimir Putin is encouraging partnerships with international explorers to maintain output at a world leading 10 million barrels a day for the next decade. Putin said the Exxon Rosneft alliance may lead to $500 billion in investment.

Rosneft holds the license, and almost 67 percent of the exploration venture, while Exxon has 33 percent. Exxon and Rosneft aim to drill the first exploration well in 2015, according to a Rosneft presentation.

Arctic and Black Sea – Exploring

The deal between Rosneft and Exxon is aimed at exploring the East Prinovozemelsky Blocks 1, 2 and 3 in the Kara Sea in the Russian Arctic, a freezing, hostile area in the Russian Arctic located very far from any energy infrastructure and the Tuapse License Block in the Black Sea.

The planned explorations could result in discovery of commercial reserves of gas, which is a less treasured commodity than oil, as international reserves are far greater than oil. Or, it may find no commercial reserves at all.

“Exxon has now won Russian authorities benevolence for operations on the local hydrocarbon market. They’ve killed two crows with one stone – got access to untapped Russian reserves and a shield against Gazprom.” said Alexander Potavin, an analyst at Prospect Investment Company.

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