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Page added on May 28, 2014

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Exxon, BP Defy White House; Extend Partnership with Russia

Business

Several of the largest oil companies in the world are doubling down in Russia despite moves by the West to isolate Russia and its economy. ExxonMobil and BP separately signed agreements with Rosneft – Russia’s state-owned oil company – to extend and deepen their relationships for energy exploration. The U.S. slapped sanctions on Rosneft’s CEO Igor Sechin in late April, freezing his assets and preventing him from obtaining visas.

However, the sanctions do not extend to Rosneft itself, allowing western companies to continue to do business with the Russian oil giant. ExxonMobil signed an agreement with Rosneft, extending its partnership to build a liquefied natural gas (LNG) terminal on Russia’s pacific coast. Known as the Far East LNG project, the export terminal will receive natural gas from Russia’s eastern fields as well as from Sakhalin-1, an island off Russia’s east coast. Rosneft announced the deal in a press release on its website on May 23.

The following day, Rosneft and BP signed an agreement to jointly explore oil in the Volga-Urals region. It will consist of a pilot project in the Domanik formations, and if successful could lead to the development of shale oil in Russia. Rosneft will maintain a 51 percent ownership of the joint venture and BP will own 49 percent.

The signing of the agreement occurred during a ceremony at the St. Petersburg International Economic Forum. The oil majors attended despite pressure from the White House to boycott the event. Many big name companies chose not to attend even though they have large economic interests in Russia, including PepsiCo, German companies E.ON and Siemens, and some of the biggest banks in the U.S.

By defying the White House, the oil majors salvaged what would have otherwise been an embarrassing event for the Kremlin. The absence of the world’s largest companies would have demonstrated Russia’s increasing isolation. Instead, Russia used the event to detail plans to expand its massive energy sector. “(They’re) eager to continue work on projects in Russia,” Russia’s Energy Minister Alexander Novak said of ExxonMobil and Royal Dutch Shell.

BP CEO Bob Dudley emphasized his company’s determination to stick with Russia. “We are very pleased to be a part of Russian energy complex,” he said at the forum. “President (Putin) has urged us today to invest into shale oil… There’s so many natural resources in Russia, the openness and partnerships Russia has with companies from all over the world is a good thing for energy,” Dudley added.

Even though there are international sanctions on Rosneft’s Igor Sechin, Dudley insisted that their business with Rosneft will continue. “It does not affect our cooperation with the company itself,” Dudley said, referring to sanctions on Rosneft’s boss. He was even able to meet Sechin privately.

French oil giant Total S.A. also signed an agreement with Lukoil – Russia’s second largest oil company – to explore for shale oil and gas. Total’s chief executive Christophe de Margerie also went to lengths to reassure the Russian hosts. “My message to Russia is simple – business as usual,” he said at the event.

To be clear, the oil companies are not legally running afoul of international sanctions. But their collective shrug in the face of European and American pressure to boycott Russia – along with the $400 billion natural gas deal Russia signed with China last week – illustrates the difficulty with which the West will have at undermining Russia’s energy sector, if it chose to do so. Russia is too big of a prize for the likes of ExxonMobil, BP, and Shell.

Or viewed another way, the moves to deepen business in Russia suggest that the world’s biggest oil companies are confident that the U.S. and Europe won’t be so bold as to truly attack Russia’s energy machine.

By Nick Cunningham of Oilprice.com



8 Comments on "Exxon, BP Defy White House; Extend Partnership with Russia"

  1. Makati1 on Wed, 28th May 2014 8:37 am 

    Russia is the last big source of oil and the majors know it. Without Russian oil, they are doomed to die a slow death soon. Russia can extend that life a few more years.
    Corporations are not patriotic anyway. They go where the money is, and it isn’t in the West anymore. Their growing markets and resources are in the East.

  2. Makati1 on Wed, 28th May 2014 8:40 am 

    I get a little blue triangle that says “ad choices”, and if it is in the comment box, I cannot submit a comment. It locks up the system. Does anyone else have this problem?

  3. Northwest Resident on Wed, 28th May 2014 9:45 am 

    How do we know that Exxon and BP are “defying” the White House? Because, Nick Cunningham of Oilprice dot com says so.

    This article’s headline will be a real attention-grabber to that group of American investors who 1) Despise Obama, 2) Believe with all their heart that Obama is personally responsible for all the oil/energy woes that America is experiencing, 3) Believe that if it weren’t for Obama their fracking/oil investments would be doing much better and 4) Are looking to make large stock value gains in their energy investments.

    The “take away” from this article for those people is don’t worry, the big oil companies are NOT slowly swirling down the tubes. Exactly the opposite — they are partnering up with “Russia’s energy machine”, despite Obama’s attempts to prevent them from doing so (hogwash), and all they have to do is Stay Invested and soon enough they will be rolling in oil/energy investment profits.

    It is all about keeping the hype pumped up, the dream alive, the illusion intact.

  4. Davy, Hermann, MO on Wed, 28th May 2014 10:01 am 

    Mak, east is heading into the abyss of economic collapse and population overshoot. Too bad you moved there although it may be exciting to see the 12MIL natives riot in your mist.

  5. rockman on Wed, 28th May 2014 1:50 pm 

    I suppose the same question could be asked of certain gov’t agencies:

    “So now we’ve got the Russians in Syria, we’ve got them in Ukraine, they’re creating mischief all over the place,” Hoekstra said, “and we’re buying Russian helicopters to give to the Afghans and the biggest promoter of this is the U.S. Pentagon.”

    Additionally, since Obama shut down NASA’s space shuttle and Constellation programs, every time the U.S. needs to send an astronaut or satellite to space, Hoekstra says they are being launched on Russian rockets, providing an additional financial boon to the country.

    “Are we sanctioning those companies?” he asked, incredulously. “Canceling these purchases? Did we cancel the purchase of these helicopters? Absolutely not.

  6. mattcharles1 on Wed, 28th May 2014 5:00 pm 

    Bold but A great move by the OIL MAJORS.

  7. Gary Anderson on Wed, 28th May 2014 10:09 pm 

    Oh, come on author. The US oil companies didn’t do this to help out an isolated Russia. They did it to help themselves. But it may have a peace dividend as the neocons could end up being put on the shelf in their quest for world domination. Now that Russia will supply China with oil, the neocons and militant Zionist types like Cheney should go fly a kite. These multiracial cabal members want to control the world but they are dangerous to world peace.

  8. Baggins on Thu, 29th May 2014 10:20 am 

    US military spending is 41 % of world total, or more than the next 13 countries combined. Russia’s share is some 4 % (Am. Journal of public health). The US is totally dominant in world affairs ATM.

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