Contrary to the declarations of the parties, US sanctions called into question the possibilities of the Italian Eni to finance oil projects with Rosneft on the Russian shelf. This follows from the reporting of joint ventures of companies. Although there is no question of abolishing the joint venture, sanctions threaten the termination of exploration work in the Black and Barents Seas, to which companies have already spent about $ 270 million. Kommersant's interlocutors in the industry claim that the projects are suspended.
The cooperation of Rosneft and Italian Eni in geological prospecting on the Russian shelf may be terminated due to US sanctions. This follows from the financial statements prepared in May for joint ventures of companies registered in Luxembourg. "US sanctions against Russia, introduced in September 2017, which imply the imposition of secondary sanctions on non-US companies making significant investments in Russian deepwater, Arctic and shale oil projects, may prevent Eni from providing sufficient funding for future operations, including drilling the second exploration wells, which as a result can lead to the shutdown of the company's work, "Shatskmorneftegaz reports. Similar phrases are contained in the report of the other two companies, but in the case of Barentsmorneftegaz without mentioning the drilling of wells (since none have yet been drilled).
Eni remains the last of the major Western partners of Rosneft, who have not officially refused to work on the shelf (this was done by ExxonMobil and Statoil). The companies in 2012 agreed to explore and develop the Central Barents Sea (JV Barentsmorneftegaz) and Fedynsk (Fedynskmorneftegaz) sites in the Barents Sea, as well as the West-Black Sea (Shatskmorneftegaz) area in the Black Sea. Eni received 33.33% in projects, while under the terms of the agreement the Italian company fully finances geological exploration until the discovery of commercial hydrocarbon reserves. Until they are found: the only well drilled in the spring on the Black Sea was dry. According to the accounts, the total investment in the JV since registration in 2013 reached $ 269 million.
At the same time, the JV reports that the companies hope to overcome difficulties, the work plan and budget for 2018 are approved. Rosneft and Eni also assured Kommersant that the companies remain partners on the shelf and that the SP is not being discussed. "Eni will continue to fulfill its obligations as long as international sanctions allow it," the representative of the Italian company said.
The previous sectoral sanctions imposed against the Russian oil industry in 2014, primarily prohibited the supply of equipment. However, Eni and Rosneft JV received the necessary permits from the Luxembourg authorities, which are still valid. Suppliers, however, need to obtain permits from the authorities of their countries (mainly the EU), and difficulties in finding partners led to a delay in drilling a well in the Black Sea for two years.
The new US sanctions are aimed primarily at banning the financing of projects and, apparently, proved to be more effective. According to Kommersant sources in the industry, the JV's de facto work has already been suspended. One of the interlocutors of Kommersant asserts that as early as in 2017, Eni began to reduce the number of employees of the joint venture. Another source notes that Rosneft employees attached to the joint venture are returning to the company.
The management of Eni publicly spoke about the suspension of cooperation at the end of January, but then the statements were immediately refuted by Rosneft, and then by the Italian company itself. But the fact that partners suspend the work of the joint venture in the Black Sea, in late March, spoke to RBC head Rosnedra Yevgeny Kiselev.
The extremely uncertain situation with the future of these projects is exacerbated by the fact that the deadlines for fulfilling licensing requirements are approaching. Drilling in the Barents Sea companies should begin in 2019 (Fedynsky site), then finish the second well on the West-Black Sea area and in a year to prepare for drilling Central Barents region. The Ministry of Natural Resources refused to comment. Rosneft estimates the recoverable hydrocarbon reserves at its 19 sites on the shelf of the western Arctic (Barents, Pechora and Kara Seas) in 203 million tons of oil and 360 billion cubic meters of gas in categories C1 + C2. Basically, they are put on the balance following the results of drilling the well in 2014 together with Exxon.
"Tougher sanctions imply a ban on significant investments in respect of certain oil production projects (deep-sea ones including), under penalty of imposing fines on violators," says Alexander Pakhomov, partner of the Criminal Code "Law and Business". He notes that there is no clear definition of what an "essential transaction" is. If you follow Washington's explanations, the lawyer explains, the measure of materiality can be the size of the deal, its impact on the ownership structure, the likely risk of some threats to the interests of the US and third countries, in fact anything.