Russian oil giant and Exxon Mobil plan joint project in Alberta

The Russian oil company Rosneft and the U.S. based global giant Exxon Mobil are teaming up in a joint venture that will involve an oil project in Alberta. However the project will also involve oil exploration and production in Russia as well.

A Rosneft subsidiary RN Cardium Oil will gain a 30 per cent share in the Harmattan acreage in Alberta. The National Energy Board of Canada estimates the formation of which the acreage is part contains about 10.6 billion barrels of oil. The problem is the oil is in very dense rock. However, new technologies may be able to release the oil.

Rosneft hopes that the Alberta investment may eventually help it develop similar unconventional oil reservoirs in Russia as well. Exxon gains from the project since it will gain access to the Russian Arctic and Black Sea. Three key Arctic fields in Russia are thought to contain up to 85 billion barrels of oil equivalent. Russia will take advantage of Exxon's experience and technology in Arctic drilling. For more see this article. Many environmentalists are concerned about drilling for oil in the Arctic.

Oil companies plan NAFTA suit over research demands

This suit just shows how NAFTA limits the manner in which contracts can be used to further the interest of local economies. Governments naturally would prefer to write in special clauses into contracts the produce benefits for people in the contract area but under NAFTA this could be illegal. The oil companies might very well win.


Oil companies plan NAFTA suit over research demands
Last Updated: Thursday, September 27, 2007 | 4:22 PM NT
CBC News
Two U.S. oil companies drilling oil off Newfoundland are planning a lawsuit under the North American Free Trade Agreement over demands that they spend money on research in the area.

Exxon Mobil Corp. and Murphy Oil Corp. are seeking about $50 million in damages from the federal government, challenging how the Hibernia and Terra Nova offshore oil projects are structured.

The Canada-Newfoundland and Labrador Offshore Petroleum Board requires that the companies operating in the fields spend a portion of their profits on research within Newfoundland and Labrador.

Exxon Mobil has a majority stake in Hibernia and a minority stake in Terra Nova. Murphy Oil has a minority stake in Hibernia, the first of three oil fields to go into production on the Grand Banks.

Both companies have filed notices of intent to sue within a 90-day notice period required under the trade agreement.

The offshore petroleum board is a federal-provincial body that regulates the petroleum industry.



The companies blame the Newfoundland and Labrador government for insisting on greater local benefits through the development agreements.

The companies claim that the board's research demand, enacted in 2004, violates the terms of NAFTA.

Hibernia began production in December 1997. The first oil was drawn from Terra Nova in January 2002.

Danny Williams, currently campaigning for re-election as Newfoundland and Labrador's premier in an Oct. 9 election, made fighting oil companies for greater benefits a hallmark of his first term.

Williams managed to negotiate a purchase agreement for an equity stake in the pending Hebron megaproject. When talks broke off in early 2006, Williams singled out Exxon Mobil for delaying the agreement.

A tentative deal, in which Newfoundland and Labrador will have a 4.9 per cent ownership stake in Hebron was announced in August.

Williams subsequently released an energy plan that calls for a standard 10 per cent equity stake in future oil and gas developments.





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