The well that brought in a lot of controversies could become one of the world’s most important crude oil deposits after Russia announced that the drilling by Exxon Mobil Corporation (NYSE:XOM) and Rosneft struck oil. The Kara Sea well becomes the most costly in Russian history.
Several environmentalists have campaigned for the halt of the project, saying it’s unfriendly to the environment. Another controversy that hit the drilling was when Exxon Mobil Corporation (NYSE:XOM) announced that it would be winding down its activities at the site due to sanctions leveled against Russia by the U.S. over the Ukraine crisis.
Even with all the challenges, Rosneft finally said in a statement:
“Rosneft successfully completed the drilling of the northernmost well in the world – the Universitetskaya-1 well in the Arctic.”
Report by Igor Sechin, the chief executive officer of the Russian company, indicates that the discovery has the potential of producing around 1 billion barrels of oil with the surrounding area showing similar signs of oil deposits. Sechin said that the Exxon Mobil Corporation (NYSE:XOM) and Rosneft project has delivered results beyond their expectations.
A big challenge however looms as the exploration will have to be kept on hold due to the U.S. sanctions that bars Exxon Mobil Corporation (NYSE:XOM) from continuing with the project beyond October 10. The U.S. sanction bars all U.S. companies from continuing with activities in Russia’s Arctic offshore.
“We have encountered hydrocarbons but it is premature to speculate on any potential outcome,” Richard Keil, an Exxon spokesman in Irving, Texas, said by telephone. “Our current focus is on completing the well and safely winding down operations consistent with our license with the U.S. government.”
What’s not clear is how soon the project will resume.
This article has been written by Victor Ochieng.