ExxonMobil (NYSE:XOM) and Russia's Rosneft have decided to return their joint license for developing oil blocks in the Gulf of Mexico after getting disappointing exploration results on top of low crude oil prices, Russia's Interfax agency reported on Friday, quoting Rosneft's press office.
Back in 2013, a Rosneft subsidiary acquired a 30-percent interest in 20 deepwater exploration blocks in the Gulf of Mexico held by ExxonMobil. The U.S. major kept the other 70 percent interest in the blocks and remained operator.
Rosneft and ExxonMobil have been working together under a strategic cooperation agreement from 2011, under which the companies and their subsidiaries undertake joint exploration and development of oil and gas resources in Russia and other countries, including the U.S.
Now, the partners in the project acquired 2Dand 3D seismic data and assessed the drilling prospects. In view of the decline in oil prices and disappointing exploration results, as well as potential sanction-related limits, the partners will hand over the licenses at their expiry at the end of 2016, Interfax quoted Rosneft as saying.
Returning licenses is a standard practice for the U.S. Gulf of Mexico operators when the technical and business evaluation of the projects do not match expectations, Rosneft said, adding that the returning of licenses would not lead to penalties for the companies.
Related: U.S. Shale Patch Welcomes OPEC Deal - But Needs $60 Oil
Investments were made according to the interests the companies have; Rosneft's share is 30 percent. The Russian company has not specified how much its share of investment was, but said the 'sum is not significant'.
Meanwhile, Rosneft continues to analyze investment opportunities in the U.S., Cuban and Mexican sectors of the Gulf of Mexico, Interfax cited Rosneft as saying.
As for Exxon's Russian adventures, the U.S. supermajor has lost more than US$1 billion from the U.S. economic sanctions against Russia. The sanctions have forced Exxon to shelve its Arctic plans, and it started to lose money from revenues generated by its ongoing Russian projects, such as the flagship project Sakhalin-1 and a number of joint ventures with Rosneft. It also lost future revenues. The Arctic venture alone was valued at US$500 billion in total investments.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More