Exxon and Russian Partners Near Deal on $15.2B Oil Project

Strategic Insights -

Exxon Corp., a leading US energy company, and its Japanese and Russian partners are on the cusp of finalizing two major production-sharing agreements worth a combined $16.2 billion. The agreements, which cover the development of three offshore oil and gas fields in the Sea of Okhotsk, are expected to be wrapped up in late May. The deals will see Exxon, along with its partners from Sakhalin Oil Development Cooperation Co. (Sodeco) and Russian oil conglomerate NK Rosneft, develop the Chayvo, Odoptu, and Arkutun-Dagi fields, which contain an estimated 2.5 billion barrels of oil and 15 trillion cubic feet of natural gas.

Key Takeaways:

  • Exxon will be the designated operator for the Sakhalin-1 project, holding a 30% stake, while Sodeco will hold 30% and the Russian partners, NK Rosneft and Sakhalin Island gas company Sakhalinmorneftegas, will split the remaining 40%.
  • The Russian Ministry of Fuel and Energy is finalizing a draft resolution to approve a $1 billion production-sharing agreement between NK Rosneft and France's Total S.A. to explore the northern Kharyaga oil field.
  • The Kharyaga project is expected to reach a peak production level of 680,000 barrels per day over the course of its 33-year lifespan.
  • The $15.2 billion production-sharing agreement between Exxon and NK Rosneft involves the development of three offshore oil and gas fields located 21 miles off the coast of Sakhalin Island in the Sea of Okhotsk.
  • Total expects approval for its production-sharing agreement in late May, with the signature of Fuel and Energy Minister Yuri Shafranik pending.
  • The project is significant not only for its size - with estimated reserves of 2.5 billion barrels of oil and 15 trillion cubic feet of natural gas - but also for its location in the Sea of Okhotsk, a region with significant potential for further energy development.

Statistics:

  • $15.2 billion: Estimated value of the production-sharing agreement between Exxon and NK Rosneft.
  • 2.5 billion barrels: Estimated oil reserves in the Chayvo, Odoptu, and Arkutun-Dagi fields.
  • 15 trillion cubic feet: Estimated natural gas reserves in the Chayvo, Odoptu, and Arkutun-Dagi fields.
  • 680,000 barrels per day: Peak production level expected for the Kharyaga oil field.
  • 33 years: Lifespan of the Kharyaga project.
  • 30%: Stake held by Exxon in the Sakhalin-1 project.
  • 30%: Stake held by Sodeco in the Sakhalin-1 project.
  • 40%: Stake held by NK Rosneft and Sakhalin Island gas company Sakhalinmorneftegas in the Sakhalin-1 project.

Sources:

  • Russian sources (no date)
  • Exxon Corp. (no date)
  • Sakhalin Oil Development Cooperation Co. (no date)
  • NK Rosneft (no date)
  • Total S.A. (no date)
  • Russian Ministry of Fuel and Energy (no date)