Kara Sea spudded despite sanctions

Monday, August 11, 2014

ExxonMobil began exploratory drilling operations in the Kara Sea’s Universitetskaya structure in the East Prinovozemelskiy area on 9 August, defying Western-imposed sanctions against Russian state-owned Rosneft.

Drilling on the Universitetskaya-1 well, the northern-most well in the area, was launched by Russian Federation President Vladimir Putin through videoconference. Rosneft CEO Igor Sechin, already named a specially designated national by the US Department of the Treasury, and ExxonMobil Russia President Glenn Waller were aboard semisubmersible drilling rig West Alpha (pictured) to participate in the launch ceremony.

Drilling is set to continue for two months.

Rosneft said that the Universitetskaya structure contains a 55m high hydrocarbon trap, with resources of 1.3 billion tons oe. It also noted that about 30 structures have been found in three East Prinovozemelskiy areas of the Kara Sea, with a resource base totaling 87 billion boe. “According to expert opinion, the Kara sea oil province will exceed in terms of resources volume such oil and gas provinces as Gulf of Mexico, Brazilian shelf, Arctic shelf of Alaska and Canada and is comparable with the current resource base of Saudi Arabia,” the company noted. The Kara Sea has water depths ranging between 40-350m, and Rosneft places the depth at the drilling spot at 81m.

With temperatures that plunge to -46°C, and with the area ice-bound roughly 270-300 days a year, operations can only take place during the ice-free summer months, and the co-venturers upgraded West Alpha’s main and supplementary equipment to prepare it for the low temperatures. North Atlantic Drilling provided the rig under a five-year contract, and representative Jan Tore Theimann was also present for the launch ceremony. The long-term contract for West Alpha was signed days ago, narrowly beating EU sanctions that aimed to block the country from receiving “sensitive technologies that can be used for oil production and exploration."

Rosneft began a 7000sq km 2D seismic acquisition program on the three licenses beginning 24 July with R/V Geolog Dmitry Nalivkin.

Geopolitical tensions

Although ExxonMobil has held a Russian presence for more than 20 years, its strategic agreements with Rosneft date back to August 2011. The two giants are exploring the Kara Sea under joint venture to form joint venture Karmorneftegaz. Rosneft and ExxonMobil were also co-venturers in the Sakhalin-1 project in the Okhotsk Sea. (Read more: Rosneft filed a lawsuit against Sakhalin Energy to obtain access to the Sakhalin-2 gas pipeline in July.

Despite the battling between the companies’ respective home countries, both men have praised the partnership on numerous occasions. "Our cooperation is a long-term one. We see great benefits here and are ready to continue working here with your agreement,” Reuters reported Waller as telling Putin in the conference call. He also spoke highly of the partnership in to Bloomberg in January, saying: “We have a unique partnership. They have the world’s biggest reserves and we have the largest market capitalization.”

While previous sanctions forbid the US and EU from business transactions with sanctioned individuals, July’s sanctions specifically intend to deny Rosneft, the world’s largest publicly-traded oil company, and other sectors of the Russian economy, from thriving off Western-based oil and gas equipment and technology.

Putin's launch ceremony speech contained what could be interpreted as thinly-veiled jabs at the sanctions while complimenting ExxonMobil. “As I have already said, all this great work was made possible by uniting the efforts of Rosneft and our US partner, ExxonMobil. Practice shows that it is nearly impossible, or at least very difficult, to implement alone such large high-tech projects, projects of global scale and significance. Today commercial success is determined by effective international cooperation,” he said, calling the US-based company “our old, reliable partner” and praising the “truly responsible, business-like approach.

He also praised the “unique” project as using “the latest technology.”

Read more:

Greenpeace scales West Alpha

Berkut platform begins operations

Rosneft completes Laptev, Kara Sea ice expedition

Rosneft plans Barents and Pechora drilling

 

Categories: Russia Arctic Vessels Europe Oil Asia Technology Exploration Drilling Seismic Government

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