On the last day of the St. Petersburg International Economic Forum, large energy companies signed contracts with Igor Sechin, President and Executive Chairman of Rosneft and a man on a US sanctions list. ExxonMobil and British Petroleum (BP) were a few of the companies involved in the forum.
It is important to remember Sechin is on the list, not Rosneft, which is Russia’s largest petroleum company. A company with a large presence in the US could face penalties if caught doing business with anyone on a US sanctions list. For example, the Treasury Department told ExxonMobil they can continue to work with Rosneft since the company was not on the list. It is advised to avoid doing business with Rosneft, but it is allowed. But the large turnout to the forum show the EU and US sanctions are not working.
“It’s pure foolishness for countries to talk about cutting their energy dependency on Russia because that dependency can never be one-sided,” Putin said. “It’s always a case of mutual dependency and that means it increases reliability and stability in the global economy and in energy.”
The Obama administration asked American CEOs to skip the forum, but ExxonMobil “sent Neil Duffin, head of the Irving, Texas-based company’s development unit.” The deal allows ExxonMobil to operate in the Arctic Circle and Rosneft to drill on ExxonMobil turf. From RIA Novosti:
Under the deal, Rosneft will now be able to operate in Exxon Mobil turf in the United States – in the Gulf of Mexico and Texas, as well as in third countries.
The agreement includes approximately $3.2 billion to be spent funding the exploration of East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea and the Tuapse License Block in the Black Sea. Rosneft will own 66.7 percent and Exxon Mobil 33.3 percent of a joint venture to develop the blocks.
The venture is scheduled to begin in August, and the companies hope to drill $900 billion worth of oil and natural gas. At first, experts thought Putin and Rosneft would distance themselves from American companies, but Putin told the forum that will not happen.
“We are not planning any self-isolation,” Putin said, proposing dialogue and cooperation to show that Russia is open for business and, perhaps, to head off more sanctions. “We hope that common sense… will prompt our European and U.S. partners to work with Russia.”
BP signed a contract “that agreed to $300 million of financing for a joint development of deposits near Kazakhstan.”
The US sanctions are not scaring off EU companies from working with Rosneft. On Saturday, Italy’s tire company Pirelli signed a contract with Rosneft to open 200 stores at Rosneft stations and “cooperate in synthetic rubber production.” From Reuters:
Under the terms of the latest agreement between the two companies, at least 60 retail outlets selling Pirelli-branded products will open in 2014 and 2015, and the remainder by 2019.
The synthetic rubber will be produced in Nakhodka, a coastal town near Vladivostok in Russia’s far east.