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Sanctions target Arctic petro partnerships

Arctic cooperation between Rosneft and Statoil might come to a standstill because of EU sanctions.

The new round of EU and US sanctions aims at Russian offshore Arctic oil and gas projects, and could put grand partnerships between Rosneft, ExxonMobil, ENI and Statoil in jeopardy.

A third round of EU sanctions against Russia has the Arctic as key target area. Information distributed by the European Council on Thursday states that ”certain services necessary for deep water oil exploration and production, Arctic oil exploration or production and shale oil projects in Russia may no more be supplied, for instance drilling, well testing or logging services.”

The sanction are likely to be adopted on Friday 12 September, EU Council President Herman van Rumpoy says in a statement. The new EU reactions on Russian conduct in eastern Ukraine follow suit with the US sanction line.

The new EU and US measures will be a major blow to the oil industry in all the involved countries, and first of all to Rosneft, ExxonMobil, ENI and Statoil.

Rosneft has over the last two years concluded grand cooperation agreeements with a number of foreign oil and gas majors, among them ExxonMobil, ENI, Statoil, CNPC and PetroVietnam. This summer, ExxonMobil is cashing out an estimated $700 million for the drilling of the University-1 well in the Kara Sea, a part of the company’s comprehensive cooperation deal with Rosneft. ENI and Statoil has extensive agreements with Rosneft in several regions, among them in the formerly disputed waters between Norway and Russia.

Also Gazprom Neft will suffer from the new sanctions. The company is in the process of exploring rich deposits in the Pechora Sea, among them the Dolginskoye field. With the sanctions, the Romanian rig GSP Saturn, which this summer has drilled at the structure, will soon have to leave Russian waters and return to safe EU ground.

Also other companies are likely to be severely hurt by the new restrictions. Among them is Seadrill, the Norwegian offshore drilling company, which just few weeks ago sold 30 percent of its subsidiary North Atlantic Drilling Ltd to Rosneft.

According to newspaper Vedomosti, the sanctions do not apply to already existing oil producing fields, only the projects which are planned to become operational in the next 5-10 years. That could leave operations at Russia’s only oil producing Arctic offshore project, the Prirazlomnoye, unaffected for now.