Putin Hails ExxonMobil’s ‘Cooperation’ in Arctic Despite Sanctions Regime

Russian President Vladimir Putin is praising ExxonMobil as a paragon of "cooperation" for beginning work on a project to drill for oil in the Arctic despite stiff Western sanctions on Russian oil companies.

"Today, commercial success is driven by efficient international cooperation," Putin said July 9 from his Black Sea residence in Sochi in a video conference call to Glenn Walker, ExxonMobil's manager for Russia, and Rosneft CEO Igor Sechin, who were at the drill site in the Arctic's Kara Sea. "[D]espite certain current political difficulties, pragmatism and common sense prevail."

The American oil giant's decision not to abandon the project despite the sanctions is widely viewed as measure of support for Rosneft, the Kremlin-owned oil giant managed by Sechin, a close Putin ally and target of sanctions imposed by Washington.

Putin spoke the same day ExxonMobil began drilling the project's first well and in fact gave the start order during the videoconference. He called the effort "unique in many ways" and said it will "use the latest technologies" both to extract oil and to preserve what he called the region's "sensitive ecology."

The Russian president also spoke of the importance of international cooperation in the project. "In spite of the difficult current political situation, pragmatism and common sense still have the upper hand, and that is very gratifying," he said. "In our opinion, this is a truly responsible, business-like approach, and only such an approach can be productive."

U.S. - and EU -- sanctions over Russia's aggressiveness in Ukraine are aimed at depriving Russian oil companies' access to capital and Western technology. The sanctions were not imposed on any U.S. companies, so how they will affect the Kara Sea enterprise is unclear.

For his part, Exxon's Walker, speaking in Russian, said ExxonMobil is eager to maintain its business ties with Russia. "Our cooperation is a long-term one," he said. "We see big benefits here and are ready to work here with your agreement."

The payoff for the $700 million investment in the Kara Sea is expected to be huge, Rosnefit's Sechin said, pointing to two geological surveys of the area. "This is the most ambitious project in the world's oil and gas industry," he said in during the call.

Sechin said the amount of oil available in the Kara Sea could rival the output of some of the world's biggest deposits. "This project will undoubtedly both open new horizons for the Russian Federation and improve energy security globally," he said. "[W]e can say that this project is comparable, in terms of reserves, with those in Saudi Arabia and by far exceeds the offshore potential in the Gulf of Mexico, Alaska and Canada."

By Andy Tully of Oilprice.com