The Black Sea deepwater oil hunt is on

Jan 13, 2010 01:00 AM

by Tamsin Carlisle

ExxonMobil and Petroleo Brasileiro (Petrobras) have teamed up with the Turkish National Oil Company (TPAO) to explore for deepwater oil and gas in the Black Sea.
ExxonMobil, the world's biggest international oil company, and Petrobras, the Brazilian state oil company, bring to the project some of the world's most sophisticated technology for deepwater oil and gas operations. That adds instant credibility to the Turkish government's long-held dream of uncovering Black Sea hydrocarbon riches equivalent to those of the Caspian Sea.

The new alliance, which gives ExxonMobil half of the 50 % stake in an oil concession off the Turkish Black Sea coast previously held by Petrobras, builds on previous agreements the Brazilian and US companies signed with TPAO in 2006 and 2008. It also strengthens growing ties between two of the New World's most prominent oil firms.
"The deal highlights how ExxonMobil and Petrobras are becoming closer partners," said Fadel Gheit, a managing director and senior analyst with the investment bank Oppenheimer in New York.

The move underscores the lengths to which international oil companies are now prepared to go to book new reserves, as the governments of many oil producing states restrict the availability of more accessible resources. The biggest firms are increasingly taking on capital-intensive "frontier" projects in ultra-deep water, hostile environments such as the Arctic, or involving oil resources like tar sands that are tricky to extract and process.
ExxonMobil, which pumps more crude than any OPEC nation except Saudi Arabia and Iran, has been active for decades in deep waters in the Gulf of Mexico and off Africa's west coast. The company hopes to add Brazilian offshore areas in which Petrobras controls billions of barrels of undeveloped reserves to its growing portfolio of deepwater prospects.

Last year, ExxonMobil discovered an oilfield off the coast of Brazil that experts have estimated could contain 8 bn barrels of recoverable oil, putting it on a par with Petrobras's nearby Tupi discovery of 2007. Petrobras, for its part, already produces almost as much oil and gas as ConocoPhillips, the third-largest US oil company, and plans to double its reserves and output from operations on five continents by 2020. If it attained that target, Petrobras could surpass ExxonMobil's output.
Outside Brazil, the company's core areas include the Nigerian offshore, where ExxonMobil is active. Petrobras is also a partner in BP's Thunderbird project in the Gulf of Mexico, which is one of the biggest deepwater oil developments in US waters. To drill in the Black Sea, the partners will use the massive Leiv Eiriksson rig, one of the biggest in the world, which has operated successfully in depths exceeding 2,200 metres.

On December 31, most shipping through the Bosphorus transecting Istanbul was suspended to allow the rig to pass through the narrow strait. The platform's towers were dismounted to allow it to pass beneath bridges.
Petrobras said it expected to start drilling operations this quarter at a location about 145 km from the Turkish Black Sea port of Sinop. The partners plan to explore an offshore area covering about 30,000 sq km. Their agreement is subject to Turkish government approval, which is likely to be granted as the country's energy ministry hopes as yet undiscovered Black Sea oil and gasfields will one day make Turkey self-sufficient in energy.

Turkey is a net oil importer. Its domestic crude production is currently limited to small fields of relatively poor quality oil close to the country's southern border with Syria and Iraq. It also produces limited amounts of gas from its European province of Thrace and from the shallow waters of the western Black Sea. The area that ExxonMobil, Petrobras and TPAO plan to explore will be further east.
"We look forward to utilising the technologies and expertise of all three companies as we explore for potential commercial resources in the Black Sea," said Mehmet Uysal, the chief executive of TPAO.

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