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Rosneft bypasses new US sanctions in the Mediterranean Sea

Development of the largest gas field in the Mediterranean, in which Rosneft participates, is no longer subject to the new anti-Russian sanctions imposed by the United States. To this end, the Russian company reduced its participation share in the international project. Yesterday Rosneft announced that it had closed the deal on the Egyptian Zohr. Its reserves contain estimated 800 billion cubic meters of gas and are comparable to the total resources of the two largest offshore fields in neighboring Israel.

Zohr's reserves contain estimated 800 billion cubic meters of gas. Photo: egyptindependent.com

According to Rosneft’s statement, the company acquired 30% of the project from the Italian Eni. "The cost of the Rosneft stake will be $1.125 billion. The company also compensates Eni for its share in the historical costs incurred by the project," the press service of the Russian company said.

The remaining shares in the project for the development of the Zohr field in Egypt's maritime economic zone in the Mediterranean Sea are as follows: 60% remains with the Italian Eni, and 10% with the British BP.

Interestingly, that at the initial stage, as early as last December, Rosneft announced its acquisition of up to 35% in a concession agreement for the development of the Zohr field.

This summer, the US Congress voted, and the president of the United States signed a bill on new anti-Russian sanctions. In particular, it prohibits supply and use of American technologies for deepwater exploration and production in international projects, if more than 33% of its share belongs to Gazprom, Gazprom Neft, Lukoil, Surgutneftegaz or Rosneft. And the Zohr field is located just in the deep water - the depth of the Mediterranean Sea in that region is 1,450 meters. Now the news is that Rosneft closed the deal, but it bought 30% instead of 35% in the project.

Alexey Grivach, deputy director of the National Energy Security Fund (FNEB), believes that the decline in the Russian company's share is due to the US sanctions law, which will be applied to oil and gas projects with a share of Russian companies of more than 33%.

Senior analyst of the FNEB Igor Yushkov adds that the decrease in the share of Rosneft in the Egyptian Zohr obviously is connected with the desire of the Italian Eni to reduce the risks of the project. The expert says that they are dealing not only with political risks, but also economic ones. "Eni wants to explore the deposit and, if possible, increase its reserves. At the same time, the Italians, I suppose, are eager to attract additional investors to the project in order to reduce the risk of development of the deposit. Geology-wise it is hard to develop. "

Let us recall that previously the European edition of Euractiv included about ten joint Russian-European oil and gas projects that fall under the new anti-Russian sanctions of the United States. So does the Egyptian Zohr. It was included in the list, because in late July it was still assumed that Rosneft would buy a 35% stake in the project.

The remaining joint projects relate in most cases to construction or modernization of the pipelines and construction of LNG plants. And since they fall under other restrictions, it would be much more difficult to withdraw them from the risk zone of possible sanctions than in the case of the Zohr project.

For Rosneft, the project to develop the largest gas field in the Mediterranean is an element of the fight against Gazprom for access to export gas pipelines from Russia, believes Igor Yushkov. "As with the pipeline from Kurdistan, Rosneft wants to show that it is becoming a global gas player," the expert said. Let us recall that under the current legislation, gas exports through pipelines are Gazprom's monopoly and until recently the holding company managed to repel attacks by Rosneft and NOVATEK. What independent gas producers have achieved in recent years is the ability to export natural gas in the liquified form.

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