Tuesday, September 23, 2014

Total announced the suspension of cooperation with LUKOIL due to sanctions – RBC

Total announced the suspension of cooperation with LUKOIL due to sanctions – RBC

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entered the EU and United States sanctions forced the French oil and gas company Total to stop work on the joint development of the Russian Lukoil reserves of shale oil in Western Siberia.

« Creation of a joint venture with LUKOIL uniquely suspended. It had not even started, so what happened to Total no impact, “- said the head of the Financial Times publication Total Christophe de Margerie.

Lukoil representative information about RBC suspension of Total’s joint venture is not yet confirmed.

The head of Total said that his company will continue to participate in the project “Yamal LNG”, and expressed the hope that the inclusion of NOVATEK sanctions lists will not prevent attract “non-dollar” financing from Western banks.

In May 2014 during the St. Petersburg International Economic Forum, President of LUKOIL Alekperov and Christophe de Margerie signed an agreement on general terms of companies’ participation in the joint project in the field of exploration and development of hydrocarbon reserves of hard in the Khanty-Mansi Autonomous Okrug. To implement the project was planned to establish a joint venture in which the Company is required to get 51%, and Total – 49%. Within two years, the company expected to jointly invest in exploration $ 120-150 million.

The first step in the work of the joint venture was to be the study of oil-bearing formations Bazhenov Formation, that is huge (about 1 million sq km.) Territory in Western Siberia, which contains most of the shale oil in Russia. According to various estimates, the Bazhenov Formation is concentrated to 2 trillion barrels of oil, including up to 100 billion barrels of recoverable reserves. However, oil reserves in the Bazhenov Formation is considered hard-to their development requires special technology, including horizontal drilling.

«The fact that Total starts on Bazhenov Formation, strengthens our position in the sector of hard hydrocarbon reserves. Concern already has considerable experience with such reserves on many of his projects. Our international experience combined with the experience of OAO “LUKOIL” in the region creates the conditions for a balanced partnership and serve as an excellent basis for the evaluation and development of significant resources Bazhenov Formation in West Siberia, “- said in May 2014 de Margerie.

September 12, 2014 the United States government and the EU have expanded the list imposed on the Russian sanctions, and American sanctions have been much tougher: they relate to oil and gas companies, including “Gazprom” LUKOIL “Transneft”, “Gazprom oil” and “Surgut”. They not only have limited access to financial resources, but also the technology and equipment for the work in the Arctic, deepwater drilling and production of shale oil.

September 19 Alekperov said that one of the main risks for the Russian oil production due sanctions would be the lack of domestic equipment for hydraulic fracturing.
 Then he called for a corresponding production equipment in Russia.

Eugene Kalyuk

September 23, 2014

RBC

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