Russian government backs Chevron’s plan to drill for oil on Black Sea shelf

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Russia to support oil drilling in Black Sea

MOSCOW — Russian Prime Minister Vladimir Putin on Thursday agreed to support a $1 billion (euro810 million) U.S.-Russian joint venture to drill for oil in the Black Sea, saying he was assured it would be environmentally sound.

Referring to the disaster in the Gulf of Mexico, Putin said Russia’s government should support efforts by U.S.-based Chevron and Russia’s state-owned Rosneft to explore for crude in the Black Sea as long as the two companies employ the highest standards.

“I’m proceeding from the basis that (Chevron’s) plans with Rosneft will be executed on the highest level, adhering to all ecological standards,” Putin told Chevron CEO John Watson.

Watson assured Putin that Chevron intended to strengthen its ecological standards in light of the oil spill in the Gulf of Mexico.

Chevron and Rosneft signed an agreement Thursday at Putin’s suburban Moscow residence. According to the deal, the companies will develop the Val Shatsky deposit off Russia’s Black Sea coast, which could contain up to 860 million tons of crude, according to Rosneft, Russia’s largest oil company.

Rosneft CEO Sergei Bogdanchikov said drilling would start at two sites — one approximately 120 miles (200 kilometers) from the port city of Novorossiisk, and the other further south off the shore of Tuapse. The first drilling should begin by the end of 2011.

The Black Sea is shared by six countries — Russia, Ukraine, Romania, Bulgaria, Turkey and Georgia — and considered to be particularly ecologically vulnerable due to the low level of fresh water inflow.

Last week Bulgarian Prime Minister Boiko Borisov said Bulgaria would withdraw from a Russia-backed pipeline project to deliver oil to southeastern Europe due to oil spill fears.

Borisov said the project — known as South Stream — was meeting resistance from residents of the Black Sea town of Burgas, where the pipeline was due to start

Still, to some extent all six Black Sea countries are clamoring to tap the seabed for petroleum, and Rosneft data indicates that there are 180 drill sites in the area.

Faced with the enormous challenges of drilling in the Black Sea, Russia decided to attract a foreign investor and eventually decided upon Chevron, Deputy Prime Minister Igor Sechin said.

Sechin said that $1 billion would be invested in initial exploration and that total investments could reach up to 1 trillion rubles ($33 billion) if the project is successful.

Rosneft shares were down nearly 6 percent Thursday on rumors that BP — which owns 1.3 percent of Rosneft — might sell its share in the Russian company.

Bogdanchikov expressed confidence that Rosneft would not suffer if BP were to cease being a shareholder.