Russia's state oil champion Rosneft on August 30 clinched a milestone Arctic exploration agreement with the ExxonMobil after its $16 billion deal with Britain's BP collapsed earlier this year.
The strategic cooperation agreement's signature was overseen personally by Prime Minister Vladimir Putin -- Russia's de-facto leader who also gave his personal blessing to the failed BP venture.
The deal will cement the ties of one of the world's largest companies to Russia and grant Rosneft its long-sought access to the North American market.
It should also finally see real funds invested in the development of Russia's Far Northern fields which Rosneft owns but is unable to tap without outside technological assistance. The deal will see some $3.2 billion invested in Rosneft's Kara Sea section of the Arctic and Russia's part of the Black Sea. The two companies said they would also form partnerships to work more closely on global projects and refocus attention on developing Western Siberia's slowly depleting fields.
"Today's event will of course be positively received by the international energy markets because new horizons will be opened," Putin said as he unveiled the deal in the southern city of Sochi.
Television footage showed the accord being signed by Rosneft chief executive Eduard Khudaynatov and ExxonMobil Development Company president Neil Duffin in the presence of a smiling Putin.
"This large-scale partnership represents a significant strategic step by both companies," said ExxonMobil CEO Rex Tillerson. "This agreement takes our relationship to a new level and will create substantial value for both companies." ExxonMobil's Russian history dates back to its 1996 involvement in the Sakhalin-1 energy project in the Pacific and has previously navigated rapid changes in Kremlin politics to win lucrative oil deals in the Black Sea.
Putin for his part said the agreement would also give Rosneft stakes in ExxonMobil projects in the Gulf of Mexico and Texas.
Rosneft had long set its sights on becoming the world's largest oil firm by reserves and production -- a goal it would have met under one of the versions of the BP deal discussed shortly before its failure in May. The BP agreement collapsed under the weight of an ugly boardroom dispute between British executives and their local partners. Rosneft then also held a formal round of talks with Anglo-Dutch energy giant Shell.
Rosneft had been hoping that any agreement on the Arctic would include a share swap option that would give the Kremlin-run firm access to Western financial markets. None emerged from its talks and the deal announced by the two sides only mentioned Rosneft taking an "equity interest in a number of ExxonMobil's exploration opportunities in North America."
Copyright Agence France-Presse, 2011
Exxon Reaches Beyond Oil