Russian state-run oil company Rosneft has just announced that a well drilled with Exxon Mobil in the Kara Sea in the Arctic has struck oil, and the oil field — which has been named “Victory” — is estimated to contain around one billion barrels of oil — larger than the US controlled oil fields in the Gulf of Mexico.
Russia owns two-thirds of the contract and Exxon one third, but Exxon’s involvement is likely to be limited so long as US sanctions (which cover oil exploration) against Russia are in place.
Development of Arctic oil production will be expensive and difficult given the reomote location and harsh climate. Freezing temperatures and Arctic ice mean that shipping is only possible during the short summer months.
Bloomberg reports that Rosneft CEO Igor Sechin states that the well has exceeded expectations and that he sees the discovery of “exceptional significance in showing the presence of hydrocarbons in the Arctic.”