Seadrill intends to push ahead with Rosneft deal, despite sanctions

Seadrill (SDRL -1.1%) CFO Rune Magnus Lundetrae says its North American Drilling (NADL +0.5%) unit can proceed with Rosneft's (OTC:RNFTF) six rig leases worth $4.25B because the contracts were signed before the latest U.S. and EU sanctions against Russia take effect.

Advocating for the business relationship and expressing doubts about the efficacy of sanctions, the CFO says "Norway and many other countries do a lot of business with Russia, and it seems a bit unrealistic to cut all ties overnight."

It is unclear how sanctions might affect SDRL and NADL, since they have roots in multiple countries; Norway is not part of the EU, though its government has signaled it probably will abide by the sanctions.

Analysts say Statoil (STO +0.5%) may be forced to cancel various deals with Rosneft to explore offshore blocks in the Barents Sea and the Sea of Okhotsk and for pilot projects for heavy oil in Siberia and shale oil in the Samara region.

Meanwhile, Weatherford (WFT -1.6%) says it closed its $500M sale of its land drilling and workover operations in Russia and Venezuela to Rosneft.

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Comments (12)
  • eapss
    , contributor
    Comments (56) | Send Message
    This whole affair with the Ukraine is a gigantic sucker play. The chocolate king should come to terms with his eastern citizens and everyone else should mind their own business. The world economy especially Europe is in no shape for quixotic adventures. Our convictions, their blood.
    1 Aug 2014, 02:11 PM Reply Like
  • jayemel
    , contributor
    Comments (19) | Send Message
    Deal with Rosneft: Bull in Bear's clothing
    1 Aug 2014, 03:30 PM Reply Like
  • rdel
    , contributor
    Comment (1) | Send Message
    Thanks for the comment. P.s., you might want to edit the first line.
    1 Aug 2014, 04:54 PM Reply Like
  • Kindly Dr Dave
    , contributor
    Comments (55) | Send Message
    I'm no international lawyer, but the first argument, i.e. "the contracts were signed before the sanctions took effect" wouldn't pass the simplest logic test. I strongly suspect the NADL deal is a victim of the sanctions. Both SDRL and NADL have far too many international agreements with sanctioning countries that might be put in question for them to persist. You will never win by going after "jam tomorrow" that forfeits "jam today"!!
    1 Aug 2014, 06:21 PM Reply Like
  • user 18159032
    , contributor
    Comments (2048) | Send Message
    Dr. Dave; what's law got to with it, what's law but a quaint old fashion notion? This is about brute force, ours, not Russia's. The thing will boil down to how much pain Europe wants to endure to prop up their own bunch of Kelptocrats.My best guess is not much. The US, since we will feel no pain,
    as much as Europe.
    1 Aug 2014, 08:28 PM Reply Like
  • Debutant
    , contributor
    Comments (2924) | Send Message
    Simple logic? Simple logic would have required international sanctions against the USA's invasion of Iraq, following which US contractors have prospered re-building Iraq that was destroyed by the US armed forces.


    Iraq is still bleeding, and has become the cradle of all anti-civilisation movements.


    Simple logic would require collective action by all countries against ISIS.


    There is no logic, no fairness, no justice. There are only selective sanctions.
    3 Aug 2014, 01:10 AM Reply Like
  • wigit5
    , contributor
    Comments (4365) | Send Message
    Iraq was a $hit hole before the US got there. But I agree the Iraq war has turned into a huge mistake. Hindsight is 20/20 though and this is an investing site and we should stick to that narrative.
    3 Aug 2014, 09:50 AM Reply Like
  • user 18159032
    , contributor
    Comments (2048) | Send Message
    wigit; Actually foresight by most old hands was 20/20. Strategically, there was no way to win in Iraq. If everything had gone as planned, we would have a thriving, diverse, democratic, unified Iraq, and being a democracy an implacable, and capable, foe of America and Israel. Once the decision was made to bail out the Haliburton shares in Mr. Chaney's 401K (in the "blind trust") by invasion, the total disaster we made in Iraq was the best possible result-- an implacable but incapable foe of America and Israel.  
    3 Aug 2014, 11:34 AM Reply Like
  • Chancer
    , contributor
    Comments (4599) | Send Message
    I doubt that Norway can enforce sanctions on NADL and SDRL as they are domiciled in Bermuda. However, the EU can (if they choose) make it uncomfortable for companies they view as skirting the sanctions. For example, the EU could pressure denial of new business to such companies- like new contracts in EU waters (North Sea, etc.).


    Contracts signed before the sanctions will proceed. New contracts with Russian energy companies are doubtful. Rosneft investing in significant % ownership of NADL could be a game changer.
    2 Aug 2014, 02:06 PM Reply Like
  • Debutant
    , contributor
    Comments (2924) | Send Message
    Fukushima nuclear reactor gets damaged, and the German government adapts an anti-nuclear energy policy.


    The US demands so, and the German government undersigns the EU sanctions against Russia.


    Let's see how the people and the economy of Germany will take all of that when the exports to Russia slow down and the winter comes.
    3 Aug 2014, 12:56 AM Reply Like
  • surfgeezer
    , contributor
    Comments (10330) | Send Message
    Wait til a SDRL?NADL rig is set up in somewhat disputed water by Alaska as the ice recedes. Russia will have no problem being like China with Vietnam and Japan and claim possession is 9/10ths of law.
    2 Aug 2014, 09:09 PM Reply Like
  • mapodga
    , contributor
    Comments (7667) | Send Message


    Nobody ask people in Germany, neither elsewhere in Europe latelly.


    First was subversion in failed state of Ukraine by MCain&Victoria which is like "biggest prize" for them. Ukraine was failed for 20 years and now is even much more. But it counts for Russia becise 1/3 people there are pure Russians and it was predictable that they will get involved.


    And now US/EU try to push Russians with economic sanctions. Probablly this is the idea of the same 'expert" that pushed Russians out of Ukraine in first place.
    They are very, very short about history. Russia never gave up in entire history and they had milions of deaths.


    So, to give up this time because of sanctions? Economic? For hod sake they survive 70year of isolations.


    Totally unrealistic. Russians don't behave in this way to give up when are pushed to the wall.


    Only effect will be that EU will loss a lot of economic possitions in Russia and Chinesse will get them.
    3 Aug 2014, 06:51 AM Reply Like
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