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Rosneft may delay Arctic wells on sanctions as it turns to Asia

Bloomberg

OAO Rosneft may delay Arctic exploration wells as Russia’s biggest oil company seeks alternatives to technology it has lost access to because of sanctions imposed on the country by the U.S. and Europe over the Ukraine conflict.

“We have to adapt and find alternative solutions,” Artur Chilingarov, a member of Rosneft’s board, said in an interview Thursday in Oslo, speaking through an interpretor. “This is difficult and cannot be done overnight.” Asked whether the company might postpone wells planned as soon as next year in the Kara Sea to 2016 or 2017, he said: “It’s possible.”

Rosneft is studying offers from Asian companies seeking to contribute technology adapted to the Arctic and invest in the Russian producer’s projects, Chilingarov said during a presentation at the Fridtjof Nansen Institute.

U.S. and European Union sanctions are hurting Rosneft’s plans to explore Russia’s Arctic waters with Western companies such as Exxon Mobil Corp. after the two made a 1 billion-barrel discovery in the Kara Sea in September. Exxon has suspended its participation and the companies’ joint venture this month ended contracts with Norwegian oil-service businesses that were due to return to the Kara Sea next year for more drilling.

A plunge in oil prices has added to the pressure posed by sanctions on Russia’s economy, which is headed for a recession.

Norwegian companies such as North Atlantic Drilling Ltd., the driller controlled by billionaire John Fredriksen, have done a “great job” on the Kara Sea project, Chilingarov said.

Rosneft and North Atlantic Drilling last month delayed a cooperation deal that includes $4.25 billion in contracts for offshore rigs because of the sanctions. “We’re discussing issues, we need to find common ground,” Chilingarov said. “It’s difficult. There are factors that aren’t dependent on us here. As for now, it’s delayed. Then we will see.”

Rosneft has no plans to leave the Arctic, said the board member, also a representative of Russian President Vladimir Putin for issues in the region. Chilingarov said he was hopeful a “spirit of cooperation” would endure between Russia and Norway, which has followed EU sanctions although it’s not a member of the 28-member bloc. “There won’t be a cold war,” he said. “We will see reasonable cooperation.”

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