Tuesday, August 30, 2011

Russia gets the offshore drilling jobs … US sits on its duff.

Today, Russia’s Prime Minister Vladimir Putin announced Exxon Mobil has been awarded exploration rights in the Russian Arctic superseding efforts by BP and Rosneft the Russian state owned oil company.   This amazing coup gives the US based company the rights to the highly lucrative offshore fields.  Russia gets Exxon Mobil’s offshore drilling expertise and a massive investment.  From the NY Times:

The agreement seemed to supersede a similar but now-defunct partnership that Russia’s state oil company, Rosneft, reached with BP earlier this year. The deal announced Tuesday replaces BP, the British oil giant, with its American counterpart and introduces some differences in the geopolitical bargain.

Where BP had swapped stock, Exxon agrees to hand over to Rosneft unspecified assets elsewhere in the world, including some that the Texas-based company owns in the deepwater zones of the Gulf of Mexico and onshore in Texas.

In the announcement of the arrangement, coming after a surprise signing in the Russian resort town of Sochi, Prime Minister Vladimir V. Putin described a sweeping global alliance — and a potentially vast investment by Exxon in the Russian Arctic.

Mr. Putin said the total investments envisioned under the agreement could reach $500 billion, including a direct investment of $200 billion to $300 billion. It was unclear what the timeline would be or whether this included the value of asset swaps.

Contrast Exxon Mobil’s fate to Shell Oil which has Alaskan offshore exploration and drilling rights.  It has already invested nearly $4 billion in exploration, including $2.2 billion for the federal lease and was turned down for production by a fly specking EPA. Contrast it to Conoco which is being held up by the Corps of Engineers that won’t allow it to build a bridge and road to its lease in the Alaskan National Petroleum Reserve to get machinery in and a pipeline to get oil out.  And there is the granddaddy of all regulatory foot dragging, the deep water oil fields in the US Gulf of Mexico.

Tens of thousands of high priced American oil field jobs sit idle because of this administration.  They will remain so until it comes to its senses.  Putin will create jobs in Russia and get reelected to the Russian presidency in 2012.

Obama will not.