Rosneft's offshore partnerships: the re-opening of the Russian petroleum frontier?

Abstract

ABSTRACT. During an intense period of only 14 months, from June 2010 to August 2011, six major cooperation agreements between oil companies were announced in Russia. Almost all of these partnerships involved offshore projects, with an international oil company as one of the partners and Rosneft as the other. The agreements were concentrated along Russia's Arctic petroleum frontier, and the three that survived the longest involved oil or gas extraction in the Arctic. This article analyses and compares the contents and contexts of the agreements, to ascertain what they have to tell about access for international companies to Russia's offshore petroleum resources and the influence of competing Russian political actors over the country's petroleum sector. The article argues that the new partnerships did represent an intention to open up the Russian continental shelf, and that the agreements were driven and shaped by a series of needs: to secure foreign capital and competence, to reduce exploration risk, to lobby for a better tax framework, to show the government that necessary action was being taken to launch exploration activities, to improve Rosneft's image abroad, and either to avert or prepare for future privatisation of state companies such as Rosneft.

Introduction: can Russia and its oil companies handle change?

“…President Putin (cited in Kramer 2011) stated that the Kara Sea alone would require USD 500 billion in investments. The Arctic is financially and technologically challenging for Russian companies on their own, and international oil companies have had a standing invitation to help develop Russia's Arctic petroleum frontier (Overland et al 2013). Consequently, the Arctic is perhaps the most important arena for interaction between Russian companies and their international peers.…”

Rosneft: lord of the rigs

“…Invited by Rosneft (and encouraged by the new fiscal benefits), other foreign companies -for example, ENI in April 2012 and Statoil (now Equinor) in May 2012 -gained a foothold in the Russian offshore sector. The terms for ENI, ExxonMobil and Equinor were almost identical: they were to bear the burden of the expenses at the exploration phase, and joint ventures were required to be established with Rosneft, which held 66.7% while the foreign company held 33.3% (Overland et al 2013).…”

Surgutneftegas: quiet conservative

“…During the 1990s, there was an avalanche of new joint ventures between foreign companies and Russia's oil majors (Overland et al 2013). Yet during this time, Surgutneftegas was the only major that did not establish joint ventures with foreigners.…”