Exxon Mobil Corp. and OAO Rosneft terminated contracts for five service vessels operated by Norway’s Siem Offshore Inc. and Rem Offshore ASA as sanctions upend plans to explore the Russian Arctic.
Siem received termination notices from an Exxon and Rosneft joint venture on contracts for work next year in the Kara Sea for two of its anchor-handling tug supply vessels and a platform supply ship, the Kristiansand, Norway-based company said in a statement today. Rem had contracts for two platform-supply vessels terminated, it said in a separate statement. Both companies will receive termination fees, they said.
Rem “assumes” the cancellations are due to U.S. sanctions against Russia, Chief Executive Officer Aage Remoey said in a phone interview. “Rosneft has never indicated that they’ve been dissatisfied with the work we’ve done.”
U.S. and European Union sanctions against Russia over its involvement in Ukraine are jeopardizing Rosneft’s plans to explore Russia’s Arctic waters with western companies such as Exxon after the two made a 1 billion-barrel discovery in the Kara Sea in September. Exxon is looking for alternative assignments for the West Alpha rig that made the discovery and was supposed to return to the Kara Sea for more drilling next summer, it said last month.
Siem fell as much as 11 percent in Oslo trading, and traded 5.1 percent lower at 3.75 kroner by 11.56 a.m., the lowest level since November 2005. Rem, which is based in Fosnavaag and is listed on a secondary Oslo exchange, was unchanged at 65 kroner.
Norway has followed EU sanctions against Russia although it’s not a member of the 28-nation bloc. Still, Norwegian sanctions wouldn’t have affected Rem’s contract with the Karmorneftegaz SARL joint venture because the deals were signed before sanctions were decided this year.
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