A Review of the Nigerian Energy Industry

Rig sails for troubled Russian waters

Seadrill drillship22 July 2014, News Wires – A Seadrill rig is reported to be heading for Russian waters to carry out a controversial drilling effort in the Kara Sea for partners ExxonMobil and Rosneft after departing a Norwegian yard at the weekend.

The semi-submersible West Alpha was reported to have sailed under escort by the Norwegian Coast Guard, along with a flotilla of tugs and an anchor-handler, as it begun its long voyage following completion of winterisation and upgrade work at the Westcon yard in west Norway.

Local newspaper Bergens Tidende reported both the police and Coast Guard were called in to supervise the departure of the rig and prevent a possible boarding by Greenpeace after activists earlier this year climbed aboard the semisub at the Olen yard in a protest against Arctic drilling.

The environmental group’s protest vessel Esperanza was earlier reported to be in the vicinity of the yard amid rumours that activists may carry out further disruptive action.

Greenpeace Norway leader Truls Gulowsen, who has earlier characterised the planned Kara Sea drilling effort as an “environmental crime” due to the potential risk of an oil spill in Arctic waters, would not tell Reuters whether the group was planning another protest.

ExxonMobil , which has chartered the 1986-built rig until July 2016 for a dayrate of $532,000, aims to start drilling of the Kara Sea probe next month.

The proposed probe targeting the Universitetskaya structure at the East Prinovozemelsky block will be the first to be drilled by the US supermajor under its Arctic exploration pact with Russian state-owned Rosneft.

The drilling operation, targeting potential resources of a reported 9 billion barrels in the overall play, is estimated to cost at least $600 million – making it one of the most expensive wells ever to be drilled by the US giant.

Drilling is set to take place in a licence that overlaps Russia’s Arctic National Park that is a habitat for a diversity of wildlife, including polars bears and walruses, and also hosts a bird colony.

However, aside from environmental concerns, the passage of the rig has now assumed greater political significance amid tighter sanctions being imposed by the West on Russia – including Rosneft – over escalating violence in Ukraine.

Rosneft was added to the list of Russian entities barred from debt financing with US sources under the latest sanctions imposed last week by the US Treasury Department.

US President Barack Obama said the sanctions were “designed to have maximum impact on Russia while limiting any spillover effects on American companies or those who are allies”.

He also warned though that additional steps were on the table if Russia does not change course in eastern Ukraine – a signal that joint ventures with US companies could face risks.

While ExxonMobil’s joint exploration effort with Rosneft may not break sanctions, it could be seen as a sign of support for Moscow from the US giant.

“We are evaluating the impact of the sanctions and don’t have anything further at this time,” ExxonMobil was quoted as stating.

Further sanctions could be in store after the downing last week of a Malaysia Airlines passenger aircraft over eastern Ukraine that was allegedly shot down by pro-Russian activists.



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