TUAPSE, Russia: Rosneft advanced an alliance with US major ExxonMobil yesterday that will help finance a push by Russia's top oil producer to exploit tight oil — reserves that cannot be extracted by conventional drilling — in Siberia.
With ExxonMobil's chief executive on hand, the state oil company's head Igor Sechin presented a Rosneft strategy paper to President Vladimir Putin that envisaged 300,000 barrels per day of potential production from unconventional reserves in Siberia.
ExxonMobil will bear the cost of financing some exploratory drilling under an agreement signed by top executives from Rosneft and Exxon, advancing an exploration partnership centered on the promising but challenging Russian Arctic.
Their initial exploration agreement - followed by similar exploration pacts with Eni and Statoil - established Sechin as the oil industry's top dealmaker. It set him up to move to Rosneft from his previous role at deputy prime minister responsible for energy in the government Putin headed as prime minister.
His leading political role in the industry was reaffirmed on Wednesday when Putin made him the secretary general of a committee on oil industry development and the environment following an informal gathering of an "oilman's club" at Rosneft earlier this month. Putin will chair the committee himself.
Unlike Saudi Arabia, its nearest rival for the title of world's top oil producer, Russia has little spare capacity. Its government is struggling to balance its dependence on oil revenues with the need for tax cuts to stimulate output.
Putin, in his final weeks as prime minister before a return to the Kremlin for new term as president, announced tax breaks to encourage drilling in tight formations, saying the boost to Russia's output could be 1-2 million barrels per day.
Rosneft says it has 1.2 billion barrels of tight reserves - oil held in non-porous rock which cannot be extracted by conventional drilling - in its license territory, though not all of its licenses allow it to drill to those depths.
Sechin, presenting Rosneft's strategy, spelled out an ambitious drilling program to help the company maintain and expand its position as the holder of the world's largest liquid hydrocarbon reserves.
Rosneft said it had encouraging results from two horizontal wells drilled last year, yielding flow rates of more than 30,000 barrels per day, Sechin's presentation said, without specifying where they were drilled.
It plans to drill 100 similar wells in 2012-14, it said.
