Moscow, Jan. 28: Exxon Mobil once was poised to acquire a stake in Russia’s largest private oil company, only to have the deal fall apart when the Kremlin arrested the owner and the company went bankrupt.
A few years ago BP was squeezed out by its Russian partners, and its top executive was forced into hiding.
Yet both Exxon and BP are back big in Russia. So are some other large oil companies, which find the allure of Russian petroleum too strong to resist, whatever the political risks of dealing with the government or becoming partners with the country’s notoriously tough billionaires.
On Thursday, Exxon Mobil, America’s largest oil company, signed a deal with the Russian state oil company, Rosneft, to explore offshore in the Black Sea. That came just two weeks after BP agreed to a share swap with Rosneft to form a joint venture to explore off the country’s ice-bound northern coast. Russia being Russia, though, BP is already in trouble over the new deal. On Thursday, its wealthy Russian partners in a separate, private venture filed an injunction in a London court to block BP’s $16 billion Rosneft agreement.
Despite the risks, Russian oil is where the action is for the West.
The country is now the world’s largest oil-producing nation, pumping about 10 million barrels a day. That is currently more than Saudi Arabia’s output, although the two countries frequently trade off for first place.
The bigger draw now, though, may be Russia’s willingness to engage in offshore exploration. Onshore oil reserves around the world are gradually being depleted. And new offshore drilling in environmentally attuned countries like the United States are currently off limits. But Russia is open to deepwater development.