[oil and gas] russia tells exxon where to get off
Mosnews reports:
Exxon Mobil has been developing the Sakhalin-1 project under a production sharing agreement (PSA) since the 1990s.
The Natural Resources Ministry’s move follows weeks of unprecedented pressure by Moscow on the rival Sakhalin-2 PSA, led by Royal Dutch/Shell, culminating on Tuesday when Russia’s environment watchdog said it had asked a court to recognize that the scheme did not comply with ecological rules. The latest move reinforced a view among Western analysts that the Kremlin is becoming increasingly unhappy with major projects controlled by foreigners.
The statement said Exxon’s belief that it should be automatically granted the rights to develop newly discovered reserves was wrong, even though the U.S. company said that they represented the same geological structure as existing deposits.
The $12.8 billion project has reserves of 307 million tons (2.3 billion barrels) of oil and 485 billion cubic meters of gas and is due to pump about 250,000 barrels per day by the middle of next year.
The consortium includes Exxon with 30 percent, Russian state oil firm Rosneft with 20 percent, Japan’s SODECO —- a government-backed consortium of oil companies and trading firms —- with 30 percent, and India’s ONGC with 20 percent.
Rosneft has said the project’s fields and the nearby structures may contain some extra 100 million tons of oil.
The Sakhalin projects, Russia’s biggest offshore developments, are located on and off the Pacific island.
Despite support from the influential Rosneft, Sakhalin-1 has already run into trouble with its plans to export gas to China. Russian state gas monopoly Gazprom said it would oppose the plan as it has a bigger rival project.
Despite the analysts’ concerns that Moscow might cancel the PSAs altogether, Russian Deputy Economy Minister Kirill Androsov said on Wednesday that the agreements would stay in place. He did speculate, however, that to avoid the troubles with authorities, the international oil giants should begin operating under a regular tax regime. The two projects are currently operating under a special tax regime that was set up for them back in 1990s.
Exxon knows the game well enough and it must stick in their craw that Russia’s going all out for the cash, despite what they, Exxon, see as genuine commitment upstream as well as R&D and there should be just a little, a little payback. Not with Russia. When will the west ever realize with whom they’re dealing?
Exxon Mobil has been developing the Sakhalin-1 project under a production sharing agreement (PSA) since the 1990s.
The Natural Resources Ministry’s move follows weeks of unprecedented pressure by Moscow on the rival Sakhalin-2 PSA, led by Royal Dutch/Shell, culminating on Tuesday when Russia’s environment watchdog said it had asked a court to recognize that the scheme did not comply with ecological rules. The latest move reinforced a view among Western analysts that the Kremlin is becoming increasingly unhappy with major projects controlled by foreigners.
The statement said Exxon’s belief that it should be automatically granted the rights to develop newly discovered reserves was wrong, even though the U.S. company said that they represented the same geological structure as existing deposits.
The $12.8 billion project has reserves of 307 million tons (2.3 billion barrels) of oil and 485 billion cubic meters of gas and is due to pump about 250,000 barrels per day by the middle of next year.
The consortium includes Exxon with 30 percent, Russian state oil firm Rosneft with 20 percent, Japan’s SODECO —- a government-backed consortium of oil companies and trading firms —- with 30 percent, and India’s ONGC with 20 percent.
Rosneft has said the project’s fields and the nearby structures may contain some extra 100 million tons of oil.
The Sakhalin projects, Russia’s biggest offshore developments, are located on and off the Pacific island.
Despite support from the influential Rosneft, Sakhalin-1 has already run into trouble with its plans to export gas to China. Russian state gas monopoly Gazprom said it would oppose the plan as it has a bigger rival project.
Despite the analysts’ concerns that Moscow might cancel the PSAs altogether, Russian Deputy Economy Minister Kirill Androsov said on Wednesday that the agreements would stay in place. He did speculate, however, that to avoid the troubles with authorities, the international oil giants should begin operating under a regular tax regime. The two projects are currently operating under a special tax regime that was set up for them back in 1990s.
Exxon knows the game well enough and it must stick in their craw that Russia’s going all out for the cash, despite what they, Exxon, see as genuine commitment upstream as well as R&D and there should be just a little, a little payback. Not with Russia. When will the west ever realize with whom they’re dealing?
posted by James Higham @ 06:28
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