Rosneft and ExxonMobil will make it official. They are joining forces to develop the Arctic and Black Sea, it was announced today in an ExxonMobil press release.
The companies’ partnership means they’ll jointly “focus on building offshore and tight oil expertise.” Tight oil is a light, crude oil, some of which is commonly found through fracturing — or “fracking” — technology.
Their Strategic Cooperation Agreement means the companies will undertake joint exploration and development of “hydrocarbon resources” (meaning oil) in Russia, the US and other countries worldwide, while also sharing technology and expertise.
The news is an obvious blow to BP, which was poised to marry the Russian petroleum provider when their $8b marriage was blocked by shareholders in an arbitration tribunal.
With today’s agreement, Rosneft buttresses ExxonMobil’s long-standing relationship in the Russian waters, specifically on what is called the Sakhalin01 project. ExxonMobil has worked with Russian providers for about 15 years.
ExxonMobil Development Co. President Neil Duffin signed the agreement along with Rosneft chief Eduard Khudainatov “in the presence of Russian Prime Minister Vladimir Putin”, no less.
The deal includes approximately $3.2 billion in US dollars to be spent funding exploring East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea, right off the Northwestern tip of Russia and Siberia, and the Tuapse License Block in the Black Sea, “which are among the most promising and least explored offshore areas globally, with high potential for liquids and gas.” ExxonMobil says.
In the course of these projects, the companies will use “global best practices to develop state-of-the-art safety and environmental protection systems,” ExxonMobil claims.
The agreement also provides Rosneft with an opportunity to gain equity interest in a number of ExxonMobil’s exploration opportunities in North America, including deepwater Gulf of Mexico and tight oil fields in Texas, as well as additional opportunities in other countries.
In the first quarter of this year, ExxonMobil reported its best earnings since the 3rd quarter of ’08: 10.6 billion. Exxon and Mobil merged in November, 1999.