Russia to Gain from Exxon's $190 billion, 5-Year Investment Plan

March 12, 2013

ExxonMobil plans to more than double its exploration acreage globally and it is singling out Russia as a key region to be targeted.

"An unprecedented level of investment is needed to develop new energy technologies to expand supply of traditional fuels and advance new energy sources," Chairman and Chief Executive Rex W. Tillerson was quoted by Dow Jones Newswires as saying. ExxonMobil has budgeted  $190 billion over the next five years on new exploration and development opportunities.

The world's largest publicly traded oil company last week signed an agreement with state-owned Rosneft giving the Russian national oil company a 20 percent stake in 30 licenses held by Exxon. The quid pro quo as the two giants further refine their relationship will be Exxon's entry into the Russian Arctic.

Rosneft already has partnership agreements with ExxonMobil, Italy's Eni and Norway's Statoil to develop Arctic blocks. Soon it will add BP to the list when Rosneft  completes its takeover of TNK-BP. Rosneft will gain new deals worth $55 billion while BP earns a 20 percent stake in Rosneft and a seat on the Rosneft board for BP Chief Executive Bob Dudley.

Dow Jones reported that Exxon's production of crude oil and other liquids is expected to increase an average of 4% a year between 2013 and 2017 as Exxon starts production at 28 major oil and gas projects, 24 of which are liquids or liquids-linked projects. The company also said 22 major projects will start production over the next three years, including an expansion of the Kearl oil sands project in Alberta, Canada, and a liquefied natural gas export project in Papua New Guinea. The company also said it expects major project start-ups to deliver 1 MMboe over the next five years.

Exxon has been criticized about its 2010 purchase of XTO Energy, which made it the largest natural gas producer in the U.S. at a time when prices for the commodity plummeted amid a market glut.

The company said last month it added back in new reserves about 115% of the oil and gas it produced in 2012, with the majority of the new reserves coming from oil-rich assets in North America.

Exxon also said it added proven reserves totaling 1.8 Bboe, of which 1.4 billion Bboe consisted of petroleum and other liquids, a sign that Exxon has been emphasizing oil exploration at the expense of its less profitable natural gas business.

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