The news is spreading around the world that Rosneft and ExxonMobil have been successful in their joint effort to find oil in the Kara Sea up in the Arctic. Personally, I am doubtful that we should produce this oil, but now that the oil appears to exist there we must place it in our global energy system. From the headlines spreading around the world, one can get the impression that the discovery will change the future of oil production. In the discussion below I will use the information from an article in the Financial Times, “Rosneft and ExxonMobil strike oil in Arctic well,” and also an article from Bloomberg News, “Russia Says Arctic Well Drilled With Exxon Strikes Oil.”
In the article from Bloomberg News, it is stated that the discovery is of 1 billion barrels while the FT reports put it at 100 million tons of oil (~ 0.75 billion barrels) and 338 billion cubic meters of gas. For both oil companies, this is, naturally, an important find, not least because the well is estimated to cost 700 million dollars, one of the most expensive in the world. But for the world, this discovery is only a significant drop in the ocean since we consume 31 billion barrels of oil per year and so the Kara Sea discovery amounts to around 12 days of consumption. It is this small volume about global consumption that leads me to think that exploiting it is not worth the environmental risks in the Arctic.
What makes this discovery politically interesting is that it is Russian and American companies that are cooperating on the project. Rosneft’s head, Igor Sechin, a good friend of Putin and the subject of US sanctions, noted clearly how important the cooperation with the USA was. He described it as “our united victory.” “It was achieved thanks to our friends and partners from ExxonMobil, Nord Atlantic Drilling, Schlumberger, Halliburton, Weatherford, Baker, Trendsetter, FMC.”
The sanctions against Russia mean that there has been hard pressure on ExxonMobil to break off the drilling, which they have now done. Presumably, they obtained sufficient data to be able to evaluate the drilled well during the winter. Next summer it will be time for new drilling and Russia will not be able to do this without the American’s technology so the sanctions must be removed by then if the drilling is to happen. The fact that Russia needs the oil from the Kara Sea for its future export income can be a major factor in the continued efforts for peace in Ukraine. It would be interesting if oil for once could contribute to peace rather than, as usual, cause war.
“Mr. Sechin said the field would be called Pobeda — meaning Victory.”