The Russians are coming! The Russians are coming!
Are the Russians coming to the Texas oil patch?
The Dallas Morning News Jim Landers column
Sep 06, 2011 (The Dallas Morning News - McClatchy-Tribune Information Services via COMTEX) --
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Last week's agreement between Exxon Mobil Corp. and OAO Rosneft, the Russian national oil company, gave the Irving-based oil giant access to three potentially lucrative areas in the Russian Arctic and the Black Sea.
In return, Rosneft was offered the chance to join Exxon Mobil in U.S. oil prospects in Texas and the Gulf of Mexico. But none of these properties was identified. And, unlike the $3.2 billion Exxon Mobil agreed to pay for the right to explore with Rosneft in Russia, no money was put forward by Rosneft to come to Texas.
"That hasn't been settled," said Exxon Mobil spokesman Allan Jeffries. "Essentially what we've done is offer some equity participation -- what we call 'farm in' -- on some exploration opportunities we have."
Rosneft is Russia's biggest oil producer, but it hasn't done much internationally. It could use help meeting the technology challenges of drilling in deep water, and in recovering onshore oil conventional drilling has left underground.
Unlocking shale
The hot onshore oil and natural gas prospects in Texas involve energy resources trapped in tight shale formations -- the Barnett Shale in North Texas, the Eagle Ford to the south and the older Permian Basin to the west. In all these places, drillers inject water, sand and some chemicals under pressures high enough to fracture the shale. That's released lots of natural gas and oil.
"China and [Norway's] Statoil have tried to come into the Eagle Ford. The Russians looked," said Amy Myers Jaffe, an energy fellow at the James A. Baker III Institute for Public Policy at Rice University.
"The Russians definitely want to come here and learn how to do shale," she said. "Part of their concern is, they want to be able to bid for shale gas in places like Poland. How can you bid if you don't know how to do it?"
If the Russian interest in Texas is clear, the process of how they get in is more opaque. American companies have a common understanding of legal protections, risk and valuing properties when they craft partnerships in the Gulf of Mexico or, say, the Permian Basin.
For government-owned Russian companies, that might be a different story.
Different world
Rosneft and Gazprom, the Russian national gas firm, are used to a far different home field. Many Russian and foreign private companies have wrecked when navigating the Russian energy sector.
Rosneft became Russia's biggest oil company when the government smashed the private firm Yukos. Rosneft bought what remained in an auction.
BP PLC had a deal with Rosneft in the Arctic earlier this year, but saw that slip away in Russian courts. BP's Moscow offices were raided by court agents looking for financial records the same day the Exxon Mobil deal was announced by Prime Minister Vladimir Putin.
Exxon Mobil has experience in this arena. Plans to export natural gas to China from its big oil and gas project on Sakhalin Island in the Russian Far East were stymied by Gazprom, which wants the gas for itself. The dispute has lasted for years.
"It's hard to be successful in a place where the rules change a lot and there's no rule of law," said Myers Jaffe. "That is a high risk. I can respect Exxon for saying the assets are so attractive we think we'll try to manage that risk."
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