Just days after making a massive oil discovery in the Russian Arctic over the weekend, Exxon Mobil will be pulling out of the joint project due to Western sanctions. But the Houston, Texas-based oil giant isn’t exactly out in the cold.
“It’s a long-term business,” Charles Erbinger, director of the Energy Security Initiative at the Brookings Institute, told International Business Times earlier this month, amid conflicting rumors about Exxon’s plans in Russia.
He explained that Exxon’s work on this particular well in the Kara Sea has only just begun and that most aren’t expecting the region to yield anything substantial for at least a few years. Plus, even without the sanctions in place, Exxon and Rosneft would have withdrawn workers in October, since it becomes too cold to operate.
But, with estimated stores worth roughly $900 billion, the oil field is certainly a part of Exxon’s plans for the future. Over the long term, “it would be a real setback for Exxon,” Erbinger said.
The well in question, Universitetskaya-1, would be the first of many to tap into a massive reserve thought to hold as much as 9 billion barrels of oil. It would be one of the first offshore, deepwater wells drilled in Russia’s Arctic but also one of the most difficult to access.
Freezing temperatures and difficult conditions mean that Russian companies have no choice other than turning to Western companies such as Exxon that have the technology and resources to tackle such a difficult project.
Over the weekend, Rosneft head Igor Sechin called the Kara Sea discovery “our united victory,” as the FT reported. “It was achieved thanks to our friends and partners from ExxonMobil, Nord Atlantic Drilling, Schlumberger, Halliburton, Weatherford, Baker, Trendsetter, FMC,” he said.
Sechin and his company are both among targets of Western sanctions against Russia made in response to the ongoing Ukrainian conflict that’s taken the lives of at least 3,000 people.
Even after sanctions were imposed, Exxon was given an extension from the U.S. Treasury Department, allowing it a few extra weeks to pull its workers and equipment from the region.
“We’re following this short time extension to ensure a safe and environmentally responsible completion of the well,” Exxon spokesperson Richard Keil told IBTimes following the announcement.