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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

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U.S. Opposes Japanese Plan To Drill For Oil Offshore Russia

Offshore

The United States has objected to a project of a Japanese consortium and Russia’s state-run oil giant Rosneft to drill for oil offshore Russia, Bloomberg reported on Thursday, citing people familiar with the matter.  

Japan Oil, Gas and Metals National Corporation (JOGMEC), Inpex Corporation, and Marubeni Corporation signed in December 2016 a Heads of Agreement with Rosneft to potentially jointly explore in the southwestern offshore area of Sakhalin Island of Russia. The three Japanese companies expect to strengthen Japanese-Russian economic cooperation, and diversify Japan’s energy sources, Jogmec said at the time.  

But since then, the U.S. government has objected to the project, basing its intervention over sanctions on the grounds that the U.S. allies within G7 should not “backfill” in projects that U.S. companies would be barred from carrying out, according to Bloomberg’s sources. Japan’s position is that this project is not “backfilling” because the Japanese companies were not competing with U.S. firms for the project, according to one of the sources.

In addition, part of the area that Rosneft and the Japanese consortium agreed to explore includes deepwater, which is subject to U.S. sanctions on the provision of equipment and services to deepwater oil projects in Russia, according to Bloomberg’s sources.

But according to the people with knowledge of the matter, the U.S. and Japanese governments are still discussing the project and may find a solution that would allow the project to go ahead. Some areas in the exploration license are not classified as deepwater under the sanctions, according to Bloomberg.

In April this year, the U.S. Treasury Department declined to issue waivers to U.S. companies, including Exxon, for drilling that is currently prohibited by Russian sanctions.

While Exxon’s and Japan’s plans are being stalled by the sanctions, Italy’s Eni, for example, is boosting oil and gas exploration and production with Rosneft, as well as in oil refining, petrochemicals, trading, and marketing, both inside and outside Russia. According to Rosneft’s CEO Igor Sechin, the two companies would start exploration drilling in the Black Sea this summer. 

By Tsvetana Paraskova for Oilprice.com

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  • Franco on July 20 2017 said:
    The US for its own interests can forbid its own companies from trading with other countries.

    But America's evil massacres of civilians in Hiroshima and Nagasaki should not inhibit the Japanese from pursuing their own energy and investment objectives. Japan is an independent country. It should act as one.
  • James Rose on July 15 2017 said:
    Our government is a government of lawyer monkeys devoid of economic or technical grasp. So f'n stupid. Sanctions only have one effect: creation of better competition to US drillers and service providers, and improved internal Russian capabilities. At the end of the day, its not rocket science. Its a drill bit with a pipe full of mud being pumped behind it. An entire government of the stupid, for the stupid, by the stupid. The idea I suppose is to create gaps in Russia's export market so US companies can grab it, but all that will do is lead to a price war that leaves only the Permian capable at a production price point inside the US.
  • Naomi on July 15 2017 said:
    Russia has not left Ukraine and Japan has not fielded an army in Poland. The free ride for Japan ended with President Trump.
  • Anonymous on July 15 2017 said:
    So basically Japan is no longer Japan because everything they do has to gain U.S. approval. So sad and Mr. Abe wonders why he failed at getting the Kuril Islands back from Russia? As long as the US dictates Japanese policy then no one will really take Japan seriously. It is embarrassing really. Japan can still be a pacifist country and a neutral country but that does not mean Japan should not look out for itself as well. Besides, it is the US that is drawing Japan into conflict. Japan should still be able to import Russian gas, boost its economy as well as cooperate on security issues with either country. Japan should have a strong self-defense force but not use it for US interests, only to defend Japan and keep Japan neutral in ANY conflict. Japan needs to be Japan again.

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