BP frozen out of Arctic drilling as Rosneft turns to ExxonMobil

 

BP was left out in the cold yesterday after its US rival ExxonMobil struck an agreement to explore Russia's oil-rich Arctic continental shelf with Rosneft, moving in just months after the collapse of a similar pact between the state energy giant and the UK group.

Exxon's agreement – billed somewhat more modestly as a "strategic co-operation agreement" in contrast to BP's failed "strategic global alliance" – will see it jointly explore the same Arctic blocks that BP had planned to exploit as part of its deal earlier his year.

Part of the $3.2bn (£2bn) earmarked for exploration under the new deal – much of which will come from Exxon – will also go towards activities in the Black Sea, Exxon and Rosneft said. The Arctic licences alone cover around 126,000 square meters, an area roughly the size of the UK North Sea.

The agreement was signed by Rosneft president, Eduard Khudainatov, and ExxonMobil development company president, Neil Duffin, in the presence of the Russian Prime Minister Vladimir Putin. ExxonMobil's chief executive, Rex Tillerson, who was also present at the signing in Sochi on the Black Sea coast, said the pact built on the US group's longstanding engagement with Rosneft over the country's Sakhalin-1 project.

"This agreement takes our relationship to a new level and will create substantial value for both companies," Mr Tillerson added.

In another echo of the BP deal that had included plans for an Arctic technology centre, Exxon and Rosneft will build an Arctic research and design centre for offshore developments in St Petersburg. But instead of the $7.8bn share swap featured in the BP-Rosneft pact, the new deal will give the Russian group the chance to gain stakes in a number of Exxon's exploration projects in North America and elsewhere, including opportunities in the Gulf of Mexico and in some of the company's oil assets in Texas. Exxon and Rosneft will also conduct a study aimed at developing unconventional oil resources in western Siberia.

Analysts were quick to note the similarities with the BP deal, which began to unravel following objections from the UK group's existing Russian partners in its TNK-BP joint venture. Just weeks after it was announced amid much fanfare in January, BP's partners in the Alfa-Access-Renova consortium claimed that the deal violated provisions in their shareholder agreement specifying that either party's business in Russia had to be conducted via TNK-BP unless the parties agreed otherwise. The alliance eventually collapsed in May. Yesterday, BP said it was focused on the ongoing success of its TNK-BP venture.

"The Russians very quickly had a plan B, and plan B was Exxon," said Fadel Gheit, an energy analyst at Oppenheimer. "It is the same plan with very small modifications. Instead of exchanging equity stakes with each other, Exxon instead is going to [joint venture] them into some of their properties in the US... Basically, it's the same blueprint as BP and Rosneft had in mind six months ago."

In addition to BP, the new deal was also seen as a loss for Shell, which was likely to have been competing for the agreement, according to analysts.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map