SANCTIONS: ROSNEFT & STATOIL DRILLING
Rosneft is about to start drilling its first oil well in Norway with the help of Norwegian state-owned Statoil despite Russia's oil industry being subject to extensive European sanctions.
The well in the Barents Sea, inside the Arctic Circle, is in one of the four fields in which Rosneft won a 20 per cent stake in the Norwegian licensing round last year.
It marks the latest foreign co-operation with Rosneft, showing the limits of the sanctions, which apply only to future contracts and partnerships.
ExxonMobil this summer will start drilling in Russia's Arctic as part of a joint venture with Rosneft. The drilling rig for that well in the Kara Sea will be provided by SeaDrill, the world's biggest offshore drilling company, which is controlled by Norway's richest man.
Statoil and Italy's Eni have also signed partnerships with Rosneft to help search for the vast energy resources thought to exist in Russia's remote Arctic areas.
But the partnerships have been controversial not just because of the western sanctions against Russia over Ukraine, which affect both Rosneft and its chief executive Igor Sechin. Environmental groups such as World Wildlife Fund and Greenpeace believe the risk of an oil spill in the Arctic is too great to justify drilling there.
Statoil, which is the operator in the Pingvin prospect with a 40 per cent stake where Rosneft is involved in drilling, is hoping for better luck after a dismal exploration season in the Barents Sea this year. The Norwegian government-controlled company has made the biggest discovery in the Barents Sea so far with the Johan Castberg find in 2011-12 but has delayed its development after disappointing follow-up drilling.
Oil companies are hoping the Norwegian Barents Sea will be the next big oil frontier, with dozens applying for exploration licences, but infrastructure is scarce and costs are high.
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REUTERS - Brent crude futures LCOc1 were down 72 cents at $61.49 per barrel at 1020 GMT, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 per barrel, down 58 cents.
BLOOMBERG - Prices dropped during the session as the International Energy Agency said the recent recovery in oil prices, coupled with milder-than-normal winter weather, is slowing demand growth. The worsening outlook for consumption dampened some of the enthusiasm that OPEC and its allies will extend supply curbs.
Global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
Product exports have grown significantly over the past several years and are expected to continue to grow as Russian refineries add capacity to produce more high-quality products.