Will Sanctions Affect Russian-U.S. Arctic Oil Partnerships?

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Source: Thinkstock

Source: Thinkstock

On Friday, Russian state-owned gas giant Gazprom announced both its first shipment of Arctic offshore oil as well as a renewed strategic alliance with Royal Dutch Shell (NYSE:RDS.A). In 2011, Exxon Mobil (NYSE:XOM) partnered with Moscow-based Rosneft to jointly produce liquefied natural gas (LNG) in the Arctic along with BP (NYSE: BP), which owns a significant minority stake in the otherwise Kremlin-controlled oil producer. As the energy industry braces itself for the expected upcoming sanctions, investors and insiders are examining these and other global partnerships as they seek to determine the sector’s future production capabilities and how it might affect the market.

President Vladimir Putin praised Gazprom’s Arctic dispatch in a speech to the company’s workers, calling it an essential first step in Russia’s planned large-scale extraction of Arctic resources that became accessible once polar ice caps started melting. Putin predicted that the shipments — nearly a decade behind its original schedule due to unexpected production costs and technical challenges — would strengthen Russia’s self-reliance, which the country’s prime minister acknowledged is a need as the Ukranian conflict intensifies. Gazprom Neft, the oil division of Russia’s largest gas producer, sent the oil from the Prirazlomnoye field via tanker to unnamed customers in Northwestern Europe. Gazprom plans to ship 300,000 tons of oil from the site this year, less than 0.2 percent of Russia’s annual 200 million ton oil exports.

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