My recent blog post (1) summarized the American-Russian Arctic oil deal. This post raises questions about this arrangement that are generally ignored by the mainline media.
- Total recoverable oil reserves in the Arctic Kara Sea are estimated at 110 billion barrels of oil, four times more that ExxonMobil’s entire reserves. In a previous post (2), I wrote that national oil companies (e.g., Saudi Aramco, Rosneft, etc. ) own approximately 95 percent of the world’s oil reserves, in contrast to international oil companies (ExxonMobil, BP, etc.) that control the remaining 5 percent. Further, oil production in the United States has been declining for years (3). Does it really make sense for the United States and ExxonMobil to depend on Russian oil or is it too late to worry about that?
- The Russian oil company, Rosneft, will receive equity in exploration projects located in Texas and the Gulf of Mexico. How much oil do the Russians expect to produce from these U.S. fields that are declining in production, especially when the United States is now importing 60 percent (4) of its crude oil needs? Will the United States have to import even more oil due to Russian oil production in the United States?
- Sixty percent (5) of the Russian export economy depends upon oil. Russian onshore oil fields in Siberia are declining. Further, Russia lacks deep water drilling technology that they expect to receive from ExxonMobil as part of that Arctic oil deal. What will happen to that American-Russia Arctic oil arrangement when technology transfer from ExxonMobil to Rosneft is completed? At that point, Russia will have what they need, both technology and access to that Arctic oil. Will ExxonMobil then be expelled from Russia?
- Under the Arctic oil arrangement, Russia will become the first non-ally to acquire U.S. oil fields. What if the President or Congress objects to this arrangement? If the United States balks, Russia might remind the United States that it receives 23 percent (6) of its uranium imports from Russia.