MOSCOW (AP) — Russia's state-owned Rosneft teamed up with U.S. company ExxonMobil on Tuesday to develop huge offshore oil fields in the Russian Arctic in return for access to resources in the Gulf of Mexico.
Because Rosneft does not have its own technology for deep sea drilling, it was looking for partners to develop the offshore projects in the Arctic and other regions of Russia. A deal it was pursuing with Britain's BP earlier this year, however, fell through.
Rosneft spokesman Rustam Kazharov told the Associated Press that the "strategic partnership" with Exxon was signed in the presence of Prime Minister Vladimir Putin.
He was unable to name the plots that Rosneft will work on in the Gulf of Mexico and Texas.
ExxonMobil said in a statement that Tuesday's agreement includes $3.2 billion to be spent on exploring three sectors in the Kara Sea in the Arctic as well as a sector in the Black Sea.
Rex Tillerson, ExxonMobil's chief executive, attended the ceremony and said in the statement that the deal "takes our relationship to a new level and will create substantial value for both companies."
ExxonMobil and Rosneft first struck a deal in January to develop a sector in the Russian part of the Black Sea.
Putin lauded Exxon for its extensive experience in drilling in the Arctic region in Canada.
Tuesday's signing ceremony was preceded by talks between Rosneft executives and ExxonMobil top brass, including President Neil Duffin.
Putin hailed the deal as "a truly strategic partnership", the RIA Novosti news agency reported. The prime minister estimated the total investment in the project at a massive $500 billion, a figure he described as "scary."
The deal is a blow for Britain's BP, with which Rosneft struck an accord in January to jointly develop the Arctic fields. That agreement fell through, however, after BP's Russian shareholders managed to block it.
"The Exxon deal is offering us much more" than BP, Kazharov told the AP.
BP's spokeswoman Sheila Williams would not comment on the deal but said BP is still "committed both to Russia and to the continuing success of TNK-BP," its Russian venture.
Meera Selva contributed to this report from London.