ExxonMobil’s Big Investment; Russia Invites Oil Majors to Join Exploration Boom

As Russia’s major oil producer Rosneft and America’s ExxonMobil expect to pump their first barrel of oil from the Arctic and the Black Sea by 2020 after a decade of research and construction.

Following a request by Prime Minister Vladimir Putin, state-backed Rosneft has invited private oil companies to help develop Russia’s energy resources.

In order to get a bite from the pie, they will have to pay Rosneft a 25 cents fee from every barrel in a newly discovered field according to Kommersant daily. Private companies will also have to finance exploration of the fields themselves.

Rosneft is offering stakes of around 30% in 12 projects in the Black Sea and in the Arctic. The offer applies to the country’s largest private energy firms, as well as several foreign majors.

‘We believe that there’s going to have to be a very substantial exploration and development program across Russia over the next ten years, if the country is going to maintain the existing production levels of just over ten million barrels a day,’ says Chris Weafer, chief strategist at Troika Dialog.

“It’s not going to be enough if one company dominates and brings the others in as minority partners. This program is going to have to involve a much broader base of exploration involving a much broader base of oil companies. If Russia doesn’t do that, then we’ll see a decline in production in about 2 or 3 years time,“ he added.

The U.S. Energy Information Agency expects global energy consumption to grow 53% from 2008 to 2035. Russia has the muscle to meet the rising demand. According to US Geological Survey, the Arctic shelf alone accounts for 20% of global oil and gas reserves, but the development of a new regions is costly.
Under the Russian legislation, state companies – Gazprom and Rosneft – are the only ones allowed to bid for the licenses to develop the country’s shelf.

Last week private firms – Lukoil, Bashneft, Surgutneftegaz and TNK BP – sent a letter to Prime Minister Putin asking to change this. They say a broader access to resources is key to spurring the desired investment in oil and gas.

Rosneft and America’s ExxonMobil signed a 3 billion dollar deal on Monday to jointly develop projects in Russia’s Arctic as well as on the Black Sea. Meanwhile Mr Tillerson made it clear the initial budget could scale up dramatically.

“We hope to drill the first well by 2014 or 2015. And depending on whether we’ll find commercial developable carbons, there will be an appraisal period when we draw some additional wells and than we could begin construction,” Rex Tillerson, the head of ExxonMobil told RT.

Source: [ rt.com ]

Posted by WoodlawnPost on Apr 24 2012. Filed under Energy. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.