North Atlantic Drilling Ltd., a subsidiary of Seadrill, has announced that 6 binding offshore contracts have been executed with the Russian oil giant Rosneft Oil Company. The total revenue potential for the six contracts exclusive of mobilization is approximately USD 4.25 billion.
According to the agreement, any break rights expire after 100 days. The executed contracts include 5 year contracts for the West Navigator, the West Rigel, the West Alpha, two newbuild CJ-54 class rigs, and a 2.5 year contract for a Gusto class Jack-up rig. These contracts commence in Russian waters from 2015 through 2017.
The contracts are consistent with the provisions of the Investment and cooperation Agreement between Seadrill, NADL and Rosneft announced on May 24, 2014, the filing with the Oslo stock exchange read.
Russian oil major Rosneft has been included in the economic sanctions package issued by the US Government and the EU earlier this month.
Under the deal, that came in the last minute, Rosneft has secured the technology from North Atlantic Drilling that will be barred under U.S. and European Union sanctions taking effect as soon as tomorrow.
In spite of the EU’s ban on export licenses for arctic and deep-water oil production, it appears that this six rig lease deal can move ahead based on the fact that it was signed on July 29, that is before the sanctions take effect, Bloomberg reports.
These contracts are a good indicator of how the latest sanctions will not have a significant impact on Russia’s oil industry, at least for now.
The U.S. and the EU imposed sanctions on Russia based on the country’s support of separatists in the neighbouring Ukraine.
The sanctions are aimed at banking, energy and defense industries, including the Russian shipbuilding industry.
World Maritime News Staff; July 31, 2014; Image: Rosneft