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Exxon Mobil to sign Arctic exploration deal with Russia's Rosneft

September 01/2011

(Wall Street Journal) -- Exxon Mobil Corp. snatched away a major Arctic exploration deal with Russia's OAO Rosneft from competitors including BP PLC in a sweeping agreement that for the first time gives a Russian state-controlled company access to energy projects in the U.S.

WSJ's Liam Denning breaks down the USD 3.2 billion deal struck between Exxon Mobil and Russia's OAO Rosneft to explore for oil in the Arctic's Kara Sea.

Exxon, entering a country where energy investments are fraught with political risk, agreed to invest USD 2.2 billion to explore potentially giant oil fields with state-run Rosneft in the ice-choked Kara Sea. It also finalized a deal to spend USD 1 billion looking for oil in the Black Sea. In return, Rosneft will be able to purchase stakes in some Exxon projects in the U.S., including deep-water Gulf of Mexico exploration and onshore oil fields in Texas. That would mark the first time a state-controlled Russian oil company acquired ownership stakes in U.S. oil and gas assets.

The deal, signed in the presence of Russian Prime Minister Vladimir Putin at his vacation residence on the Black Sea, is a big win for Exxon as it competes with other international players for increasingly scarce, large, untapped oil deposits. It is also an embarrassment for London-based BP, which tried to negotiate a deal for the same Kara Sea acreage earlier this year. That deal fell apart in May amid a legal battle with BP's partners in its existing Russian venture. Other companies, such as Chevron Corp., Total SA and Statoil ASA, were also angling to grab the Arctic acreage.

Tags:Exxon Mobil.
Category:General News
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