Last year, Russian state-controlled oil conglomerate Rosneft became the largest oil company in the world after acquiring one of its major competitors. The company has had its sights on tapping Russia’s vast, treacherous Arctic reserves, and after making a few huge deals, it looks like it now has the resources needed to do so.
Russia’s Arctic is estimated to have 25 to 30 billion tons of recoverable oil reserves, which is stunning when you consider there are around 359 billion proven reserves worldwide, including shale oil and oil sands. The only problem is that the Arctic reserves are incredibly hard to exploit, as we saw with Shell’s platform disaster earlier this year. Fields in the Kara and Barents Seas are stuck in incredibly cold and rough seas, and the huge reserves in Siberia’s Laptev, East Siberian, and Chuckchi Seas are additionally separated from population centers by thousands of miles of tundra.
Those vast oil and gas fields aren’t impossible to tap, just expensive. With oil platforms in the farthest reaches estimated to cost somewhere between $5 billion and $8 billion apiece, it should come as no surprise that the Arctic has remained quiet this long. (It’s also a reason why Soviet scientists wanted to melt the whole thing.) Continue reading
Meet Rosneft—Russia’s third-largest oil conglomerate that is about to buy out tnk-bp. This strategic move will not only propel Rosneft to the top of Russia’s oil industry, but it will also make both of the nation’s largest oil and gas companies state owned.
tnk-bp is currently co-owned by British oil firm BP and a Russian group of billionaire investors called aar. According to Marin Katusa of Casey Research, Russian President Vladimir Putin’s oil company Rosneft is about to purchase BP’s 50 percent stake in tnk-bp. The move will cost Rosneft approximately $27 billion in cash and stock. At the same time, Rosneft is trying to purchase the other 50 percent stake from aar, although this deal is yet to be finalized. In the end, according to Reuters, the deal as a whole will be worth $55 billion.
If the deal succeeds, it will be the largest purchase since Exxon bought out Mobil over a decade ago. Continue reading