One of the main business deals to help Russia explore its Arctic oil prospects has been delayed and could be scrapped as western sanctions continue to bite.
A series of contracts between North Atlantic Drilling, the Norwegian subsidiary of the world’s biggest offshore rig company, and Rosneft, the Russian state oil company, should have been completed by this weekend but have been postponed until the end of May. If US sanctions are not eased by then the deal is likely to be ended, people familiar with the transaction said.
The tie-up included a $4.25bn contract to provide rigs for the joint venture between Rosneft and ExxonMobil, which struck oil in the Russian Arctic using a NADL rig this summer.
But that drilling attempt in the Kara Sea was cut short by a few days as US and EU sanctions hit western companies’ ability to work in the Russian Arctic.
NADL and Rosneft “remain committed to the transaction”, the Norwegian company said. But people close to the deal said that the delay is being seen as a bet that sanctions might be eased by May.
Part of the NADL-Rosneft agreement was for the Russian company to take a 30 per cent stake in the Norwegian group in return for land rigs and cash.
Analysts have suggested that any collapse of the deal could lead to NADL, which is majority owned by SeaDrill, needing fresh capital. The Rosneft drilling contract represents about two-thirds of NADL’s order backlog.
SeaDrill and NADL executives thought that they had got around western sanctions by signing the deal with Rosneft just hours before the restrictions came into force in August.
But the US measures in particular proved to be tougher than they expected as they ban western companies from exporting technology or services to use in the Arctic.
NADL is examining alternative uses for all six rigs involved in the deal and Rosneft is also looking into its other possibilities, according to people involved in the deal.
Both parties have the right to end the co-operation without any financial payment and those break rights have also been extended until the end of May.
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