U.S. oil company Exxon and Russia's Rosneft sign deal to develop oil and gas reserves in the Russian Arctic, potentially opening up one of the last unconquered drilling frontiers.
SOCHI, RUSSIA (AUGUST 30, 2011) RURTR - The Arctic deal, signed on Tuesday (August 29) by Exxon and Rosneft in the presence of Russian Prime Minister Vladimir Putin, dashes the hopes of British company BP of reviving its own deal with Rosneft, blocked in May by its billionaire partners in an existing Russian venture.
With Putin at the signing ceremony in the Black Sea resort of Sochi were Exxon CEO Rex Tillerson and Russia's top energy official, Deputy Prime Minister Igor Sechin.
"Today's events will be well received, no doubt, by the world market because new horizons are opening up. One of the world's leading companies, Exxon Mobil, is starting to work on Russia's strategic shelf and deepwater continental shelf," said Putin.
Under the deal, Exxon and Rosneft will invest an initial $3.2 billion in the early phase of developing East Prinovozemelsky Blocks 1, 2, and 3 in the Arctic Kara Sea and the Tuapse licensing block in the Black Sea. But the final figures will go much higher.
"It's hard to even pronounce such figures direct investment could amount to 200, 300 billion and if we also consider the development in the territory, the infrastructure, the construction work needed, then the figure could go as high as 500 billion (US dollars)," said Putin, smiling.
"The government of the Russian Federation will cooperate with you to ensure the success of your work," he added.
Rex Tillerson, chairman and chief executive officer of Exxon Mobil Corporation (NYSE:XOM), who attended the ceremony, said ExxonMobil will benefit Russian energy development by working closely with Rosneft.
"The agreement today represents a significant expansion of the Rosneft ExxonMobil joint activities both in Russia and as you noted, importantly, in international opportunities as well," said Tillerson, seated next to ExxonMobil Development Company President Neil Duffin in talks with Rosneft and Russian government officials.
"I appreciate very much the strong expression of support from the Russian Federation government for Rosneft to enter into this alliance agreement with ExxonMobil," continued Tillerson.
The agreement was signed by Rosneft President Eduard Khudainatov and ExxonMobil Development Company President Neil Duffin at a ceremony following talks.
The deal provides Rosneft with an opportunity to gain equity interest in a number of ExxonMobils exploration
opportunities in North America, including deep-water Gulf of Mexico and tight oil fields in Texas (USA ), as well as
additional opportunities in other countries. The companies have also agreed to conduct a joint study of developing light oil
resources in Western Siberia.
The companies will create an Arctic Research and Design Center for Offshore Developments in St. Petersburg, which will be staffed by Rosneft and ExxonMobil employees. The center will use proprietary ExxonMobil and Rosneft technology and will develop new technology to support the joint Arctic projects, including drilling, production and ice-class drilling platforms, as well as other Rosneft projects.