Rosneft and Norway’s Statoil team up for Arctic drilling despite sanctions on Russia

Two Norwegian and Russian state-owned energy companies have entered into a controversial partnership over oil exploration in the Arctic, despite the European sanctions imposed on Russia because of the Ukraine crisis.

As part of the partnership, Rosneft and Statoil would explore the Norwegian Arctic and search for oil and gas in the Barents Sea, an area that environmentalists have often claimed to be too fragile and precious to be exploited.

The first well to be drilled would be the Pingvin-1, by the Transocean Spitsbergen rig, where the firms plan to drill 1516 metres underwater.

The Russian firm said in a statement, “The start of these exploration operations marks an important milestone in developing the cooperation between Rosneft and Statoil.

“The companies plan to implement their experience of exploration and development of hydrocarbon fields in regions with harsh climate.”

This is despite the European Union imposing sanctions on Russia, because of the country’s support to the Ukrainian rebels and allegations on complicity in the shooting down of the flight MH17.

Rosneft has been affected by the measures, which prevent the firm from accessing international funding, while sanctions also include a ban on equipment and technology exports for deep water, Arctic or shale oil projects for one year.

Responding to the restrictions, Russia has embargoed food imports from the EU.

The sanctions have raised concern among a number of Western energy firms and investors that buy energy from or own shares of Russian companies, including Centrica and BP. BP said in July it feared that sanctions on Rosneft could affect its profits.

Meanwhile, other companies such as ExxonMobil, ENI and North Atlantic Drilling are also closing deals on Arctic exploration with Rosneft.

Photo: 09th Airlift Wing Stratton Air National Guard Base via flickr

Further reading:

Norway’s sovereign wealth fund to reveal voting intentions to improve shareholder transparency

Western sanctions on Russia worry BP investors

BP profits rise but fears over economic sanctions on Russia grow

Norway’s oil fund considers impact of sanctions against Russia

Centrica taking advice from UK government over Russian sanctions