The Energy Consulting Group

Overview
Russia and International Oil Companies
Arctic Ocean Pictures
3D Maps

Please contact us at insight@energy-cg.com for more detail.

Overview

Russian Oil  and Gas Index Map For Higher Resolution, Click Image	Estimated Technically Recoverable Shale Oil Potential For Russia For Higher Resolution, Click Image For Higher Resolution, Click Image
Estimated Technically Recoverable Shale Gas Potential For Russia For Higher Resolution, Click Image	Russian Oil Production, Exports and Reserves For Higher Resolution, Click Image
Russian Gas Production, Exports and Reserves For Higher Resolution, Click Image

Russia and International Oil Companies
One of the more interesting facets of the Russian oil and gas industry has been the success that large, integrated international oil companies have had in making inroads into the Russian oil patch since the dissolution of the Soviet Union at the end of the 1980's.  Historically, the USSR was not open to allowing western firms to help them develop its vast oil and gas endowment. However, upon the dissolution of the USSR, Russia sought western capital and expertise to help revitalize its oil and gas business, ENI, Total, Shell, Statoil, BP, and others established upstream footprints with varying degrees of success.  Perhaps no other firm better exemplifies such efforts than ExxonMobil under the leadership of Rex Tillerson. As the maps below illustrate, ExxonMobil has established a wide ranging position, with potentially enormous reserves and value, in the Russian upstream oil and gas industry.

ExxonMobil Involvement in the Upstream Russian Oil and Gas Sector For Higher Resolution, Click Image	At the heart of ExxonMobil's efforts in Russia is its Strategic Cooperation Agreement (SCA) with Rosneft, the largest of Russia's oil and gas companies.Of the four initiatives listed on the map to the left, the one currently producing oil and gas is the Sakhalin I joint venture with Rosneft at Sakhalin Island, where the JV is producing large amounts of oil and gas from the three oil and gas fields.  However, it is the Arctic Ocean concessions that have the potential to truly "move the needle" of the type that Wall Street pays attention to, especially reserves.  Rosneft provided estimates for the 8 acreage blocks  that comprise the ExxonMobil and Rosneft joint venture to approximatley 210 billion boe of oil and gas resource potential.  Now, we recognize that this estimate is highly speculative and based on little actual drilling, so is subject to change (perhaps dramatically so) when, and if, the JV partners get around to drilling in the license areas.  That said, it does seem to indicate that Rosneft, and presumably ExxonMobil, believe the acreage to be highly prospective, potentially extremely valuable.
Sakhalin Oil and Gas: Phases I and II For Higher Resolution, Click Image	The Sakhalin 1 JV is producing oil and gas from 3 fields:  Chayvo, Odoptu, and Arkutun-Dagi- located in sub-Arctic conditions off the northeastern coast of Sakhalin Island in the Russian Far East.  Development efforts at these three fields are ongoing.    In addition to these efforts, ExxonMobil and Rosneft are evaluating the efficacy of adding an LNG export facility to complement the existing facility that serves the Sakhalin II joint venture.
Russian Arctic Ocean Licenses Reported As Part of ExxonMobil/Rosneft JV For Higher Resolution, Click Image	Rosneft and ExxonMobil Arctic Ocean Joint Venture In August 2011, ExxonMobil, the largest western oil company, and Rosneft signed a deal to develop oil and gas reserves in the Russian Arctic, opening up one of the last unconquered drilling frontiers.  Specfically the deal encompassed the East Prinovozemelsky (EPNZ) License Block located in the Kara Sea and with a total area of 126,000 square kilometers (30 million acres). To hi-light the importance of the deal from a Russian perspective, it was signed by Exxon boss Rex Tillerson and Russia's top energy official deputy prime minister Igor Sechin in the presence of Russian prime minister Vladimir Putin. ExxonMobil and Rosneft announced plans to increase the scope of their strategic cooperation by adding seven new blocks in the Russian Arctic in the Chukchi Sea, Laptev Sea and Kara Sea, spanning approximately 600,000 square kilometers (150 million acres). The combined size of the 8 blocks is large.  For perspective, if the licenses were combined into one and considered a country, it would be ranked as the 40th largest country in the world, approaching Turkey in size. According to Rosneft, estimated potential recoverable oil resources in the three East Prinovozemelsky subblocks stand at 6.2 billion tons (about 45 billion barrels) with total potential hydrocarbon resources at up to 20.9 billion tons of oil equivalent, which works out to over 600 TCF of gas.  Now, these are huge numbers, which is exciting, but there are some important caveats. With the exception of the University-1 well, which resulted in the Pobedo discovery, it is our understanding that this resource estimate is based on 2-D seismic only, meaning it is subject to revisions (potentially very large revisions) as propects are drilled.  That said, if the just discussed volumes were realized and if average realized oil and gas prices were respectively, $55/bbl and $6/mcf, then the total revenue stream could approach approximately $3 trillion dollars. The results of the University-1 well seems to confirm that there is quite large potential in this block.  This well was drilled in 2014 and the State Reserves Commission confirmed Rosneft reserve estimates for the Pobeda discovery of130 million tonnes of oil and 499.2 billion cubic meters (bcm) of C1+C2 gas, which is roughly equivalent to 1 billion barrels of oil and 17 TCF of gas.  Still a far cry from the total block potential discussed above, but nonetheless encouraging

Arctic Ocean Pictures
Pursuing oil and gas developments in the Arctic Ocean obviously means successfully navigating sea ice, and protecting the unparalleled wildlife endowment of the region.

Developing Oil and Gas Fields in the Arctic Means Dealing with Sea Ice For Higher Resolution, Click Image	Chukchi Sea: Walrus Herd Relaxing On An Ice Raft For Higher Resolution, Click Image
Chukchi Sea: Walrus Mum and Pup Rest On An Ice Raft For Higher Resolution, Click Image	Chukchi Sea: Polar Bear Family For Higher Resolution, Click Image

In December 2016, President Obama placed the Arctic Ocean offlimits to new oil and gas leasing.  However, this action does not apply to areas outside US territorial waters.  A good example of this is the Rosneft-ExxonMobil JV, which includes three acreage blocks just to the west of the US-Russia boundary demarcation.  As the map illustrates, the Russian Chukchi JV acreage dwarfs the existing leases in US waters, and the eastern side of these blocks is close to the US-Russian border, raising questions about the effectiveness of the US ban on actually halting or even slowing development of oil and gas resources in the Arctic Ocean.

Comparison of US and Russian Oil and Gas Leasing in the Chukchi Sea