Norway’s Statoil ASA(STO,
STL.OS) signed Saturday a potential $100 billion cooperation agreement with
Russian state oil company Rosneft (ROSN.RS) to develop Russia’s mostly untapped
offshore energy resources in the Arctic.
Statoil joined Exxon Mobil
Corp. (XOM) and Italy’s Eni SpA(E, ENI.MI), which signed similar
deals earlier 2011, in a so-called “scramble for the Russian Arctic” following
Russia’s approval of long-awaited tax breaks for the potentially rich offshore
fields.
Russia faces declining oil production
from its traditional oil regions and is eager to attract Western energy
companies with money and expertise to develop the Arctic shelf. The move to
open the Arctic shelf to foreign investors received support from Russian
President-elect Vladimir Putin, who was at the signing ceremonies.
People familiar with the matter said
that Russia’s energy czar, Deputy Prime Minister Igor Sechin–who isn’t expected
to join the new Russian government to be announced in the coming days–had a
prominent role in securing all three agreements.
Statoil‘s deal is structured
similarly to those signed by Exxon and Eni with Rosneft.Statoilwill
set up joint ventures with its Russian partner to develop fields in the Barents
Sea and Sea of Okhotsk, holding 33.33% in each. Statoil is to pay all costs
for exploration, in addition to some historic costs and possible bonuses to the
Russian company. The agreement also envisages Rosneft’s participation
inStatoilprojects in Norway’s offshore zones.
“Partnership between Rosneft
and Statoil will contribute significantly to the development of
economic relations between Russia and Norway, signifying a new era of
unprecedented levels of trust,” said Rosneft President Eduard Khudainatov. The
deal followed the final demarcation of the sea border between Russia and Norway
in 2011.
“We aim for early access at scale in
new and promising basins, positioning us for high-impact exploration. This
agreement is at the core of our strategy, supporting our long-term growth
ambitions,” saidHelge Lund, chief executive of Statoil, in a statement.
The companies will jointly explore
the Perseevsky license in the Russian part of the Central Barents Sea and three
licenses–the Kashevarovsky, Lisyansky and Magadan-1–north of Sakhalin island in
the Sea of Okhotsk. The four offshore licenses cover an area of more than
100,000 square kilometers and may demand an investment of between $65 billion
to $100 billion dollars over decades.
Statoilis not new to Russia,
being one of the first Western oil majors to open an office in Moscow after the
collapse of communism. Until recently, however, it has failed to secure any big
deal in the country.Statoilis part of an international consortium,
together withTotal SA (TOT, FP.FR) andGazprom(OGZPY, GAZP.RS),
to develop the Shtokman liquefied natural gas project off the Russian Arctic
Circle, but the project has suffered a number of delays on the investment
decision.
Together with Russia’s second-largest
oil company,Lukoil Holdings (LUKOY, LKOH.RS),Statoilis
developing the West Qurna-2 field in Iraq but is planning to sell its stake to
the partner.
“The deal has been discussed for some
time, and it’s really good that it’s finally done,” Troika Dialog analyst
Valery Nesterov said, adding that the fields “are not at all bad for
exploration”
“It’s a sign that Russia is eager to
intensify exploration at the Arctic shelf, and is trying to minimize risks by
diversifying the partners,” he added.
Another Western player,BP
PLC(BP) said Saturday it is also interested in participating in Arctic
projects in Russia. The company may only invest in Russia through its 50-50
joint venture with a group of local billionaires,TNK-BP Holding‘s
(TNBP.RS), in order to avoid violating a shareholders’ agreement following a
London court’s decision. Last year BP’s Russian partners forced the company to
give up an Arctic exploration project and share-swap deal with Rosneft.
Chris Einchcomb,TNK-BP‘s senior
vice president of exploration and appraisal, said Saturday the company
responded positively to Rosneft’s invitation to participate in the Arctic
projects. “We look forward to starting working group meetings with Rosneft in
the nearest future,” he said, adding that the company is able to bring in BP’s
and its own offshore experience.
A BP spokesman said the company has
yet to be presented with TNK-BP plans for activities in the Arctic, and “it
will be premature to comment on these specific developments.” Lukoil has also
expressed interest in partnering with Rosneft on the shelf.
Troika’s Nesterov said with more
Arctic deals being signed with foreign companies, fewer fields remain for
private Russian companies.