The North Atlantic Drilling Ltd believes there are “significant risks” related to its $4.1 billion Arctic contracts with Rosneft.
The company, a subsidiary of Seadrill, in May 2014 announced a major cooperation agreeement with Rosneft on drilling in Russian Arctic waters. That deal is now in jeopardy.
In its 2014 Q4 report, NADL writes that ” there are significant risks attached to the US$4.1 billion order backlog related to the drilling contracts with Rosneft”.
The risks comes as western sanctions have created major problems for Rosneft’s Arctic drilling plans. The company is now putting practically all planned drilling operations on hold. As reported by BarentsObserver, company President Igor Sechin is requesting federal authorities for a two years extension of Arctic offshore license terms.
In November 2014, NADL informed that the closing of the deal, originally planned to made before year’s end, will be completed only in May 2015. Now, also that looks optimistic.
The company report reads that “due to recent developments and events, North Atlantic Drilling believes that it will be very challenging to close the transactions on the same terms or in the timeframe contemplated in the executed agreements”.
At the same time, NADL highlights that “the parties remain in discussions and continue to explore various alternatives for future cooperation”.
The Investment and Cooperation Agreement between the two companies signed in May 2014 would give the Russian company a 30 percent stake in the NADL. The deal also includes the execution of six offshore drilling contracts with Rosneft and NADL’s acquisition of approximately 150 land drilling from Rosneft’s land drilling fleet in Russia.
Related stories from around the North:
Canada: Canada ponders exceptions to relief well rule for Arctic oil drilling, Alaska Dispatch
Finland: Solar and wind power yield cheapest energy say Finnish experts, Yle News
Greenland: #SavetheArctic… from Greenpeace, Blog by Heather Exner-Pirot
Iceland: From Arctic Circle 2013-2014, a big drop in the price of oil, Blog by Mia Bennett
Norway: ‘Norway’s oil exports plunge to half, Barents Observer
Russia: U.S. companies bid for contracts in Arctic Russia, Barents Observer
United States: Arctic standards won’t be ready for Shell’s return, Alaska Dispatch