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Rosneft gains Exxon expertise in developing tough oil reserves

Published: April 18, 2012 | 6:14 am
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Gulf News reported that Moscow and London Russian state oil firm Rosneft will gain access to North American energy sources and know how for developing hard to produce reserves when it finalizes JV with Exxon Mobil.

Industry sources said that Rosneft was offered a role in 7 ExxonMobil projects under its landmark deal last year with the biggest US oil company which could open up 36 billion barrels of oil in the Arctic offshore and help keep Russia’s place as the world’s top producer.

Two industry sources with knowledge of the deal said they were La Escalera Ranch, a tight oil project in West Texas, a drilling venture in the Cardium shale in Canada’s province of Alberta and 20 fields in the US Gulf of Mexico out of the 144 operated by ExxonMobil. They would gain minority interests in the projects and may pursue more joint projects in future including ventures in third countries.

Rosneft’s focus in North America will be on so called unconventional hydrocarbons including resources such as shale oil and shale gas which cannot be accessed with conventional vertical drilling. It will seek to deploy the advanced recovery methods at its own fields in Siberia.

Russia’s oil tsar, Mr Igor Sechin deputy PM of Rusia will present the project to analysts with Exxon CEO Mr Rex Tillerson and the head of Rosneft Mr Eduard Khudainatov in New York. The JV deal will be formalized tomorrow.

Exxon has highlighted the potential of its projects in West Texas, where the fields of the Permian Basin a mature oil producing region like Western Siberia with tight oil that is harder to extract than conventional oil have regained appeal at higher oil prices. Under the terms of the deal, initialled in August 2011 the two will also look at joint development of tight oil in Western Siberia where production of conventional oil is in decline.

Rosneft has said that it could have more than 2.5 billion tonnes of oil in the shales of the so called Bazhenov formation at its West Siberian conventional fields discovered and explored by Soviet era geologists.

Analysts said that the Siberian tight oil, held in non porous rock might be brought to production sooner than the three offshore blocks in the hostile and challenging environment of the Arctic Kara Sea that Rosneft and Exxon plan to explore.

The Exxon and Rosneft deal was contingent on a softened tax regime for Arctic offshore investment. That won political backing on Thursday from Mr Putin who returns to the Kremlin next month after winning a presidential election.

In contrast to the US where oil companies face political pressure to pay more taxes, Russia is looking for ways to ease one of the world’s toughest tax regimes that has been blamed for a shortfall in investment in the sector which provides the country with over half its budget revenue.

Source – Gulf News

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