Norwegian oil giant,
) has teamed up with Russia's Rosneft to jointly explore oil and
gas on the Norwegian Continental Shelf (NCS) in the Barents Sea.
The partnership comes in the wake of sanctions imposed by the U.S.
on Rosneft and Novatek, Russia's second largest gas producer, owing
to Russia's support to rebels in Ukraine. A subsidiary of Rosneft
was awarded a 20% participating interest in the four fields within
the NCS during a licensing round last year.
Both the companies intend to evaluate the drilling results by the
end of the present year.
The United States and European Union (EU) imposed sanctions over
equipment and technology exports for new projects in deep-water,
Arctic or shale oil for one year. The ban is unlikely to have
significant impact but will be detrimental if extended on a
Norway, not a member of the EU, is supporting the sanctions, which
are intended not to stop joint projects but rather seek to starve
Rosneft of foreign financing and access to modern technology.
Prior to the sanctions, Russia was an emerging market for the oil
service industry. Rosneft has also secured deals to jointly work
with ExxonMobil Corporation (
), ENI SpA (
) and Statoil for the development of Russian sections of the Arctic
In 2013, Norway tapped an offshore Arctic zone bordering Russia in
the eastern Barents Sea for oil and gas exploration. According to
the Norwegian Petroleum Directorate, the area is estimated to hold
about 1.9 billion barrels of oil equivalent, of which 15% is oil.
Statoil currently carries a Zacks Rank #3 (Hold). Investors
interested in the oil and gas sector could consider a stock like
Weatherford International plc (
), which sports a Zacks Rank #1 (Strong Buy) and is expected to
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