Norway’s biggest energy company Statoil may be forced to terminate an agreement for oil exploration with Rosneft because of escalating European and US sanctions against Russia, analysts said.
Statoil has signed accords since 2012 with Russia’s biggest oil company, also a target of bans, to explore offshore blocks in the Barents Sea and the Sea of Okhotsk and for pilot projects for heavy oil in Siberia and shale oil in the Samara region.
Rosneft also has agreements for offshore exploration with Exxon Mobil and Eni.
There is a more than 50% chance that the Statoil- Rosneft deal will either be canceled or modified, Swedbank First Securities analyst Teodor Sveen Nilsen said.
The EU and the US last month stepped up sanctions against Russia over its support of separatists in the eastern part of Ukraine, where a Malaysian Airlines flight carrying 298 people was shot down July 17.
EU sanctions prohibit the export of technology intended for use in deep-water, Arctic and shale oil exploration and production, while US sanctions directly affect Rosneft’s access to its financial markets.
Statoil and Rosneft are planning the first of three wells in North Komsomolskoye in West Siberia next year, the Norwegian state-controlled company said in April.
The two explorers have also committed to drill six offshore wells in the Russian Arctic between 2016 and 2021 that are to be fully financed by the Stavanger, Norway-based company.
“If the sanctions are still in place in a year, when they plan to start drilling, there won’t be any drilling,” said analyst John Olaisen at ABG Sundal Collier Holding.
“There would be too much uncertainty about future projects. If they make a discovery, would they be able to keep it? And how would Rosneft be able to finance its share?”
Initiated projects are progressing according to plan and it is too early to say whether or how sanctions will affect activities in Russia, Statoil spokesman Knut Rostad said.
“We’ll have to spend some time to understand the details and what they potentially mean for us,” he said.
While Norway is not a member of the EU, it signaled this week it will probably follow the European sanctions. EU and US sanctions would be relevant for Statoil in any event, Rostad said.
Much of the equipment under EU restrictions is not “critical,” Rosneft said in a statement. The company can find alternatives in Russia and outside Europe, although reorganizing supplies will “take some time,” it said.
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