Natural Resources and the Crimea Conflict
As it seems behind the veil and after some consideration that there might be additional reasons for Russia occupying the Crimea beyond securing their only warm-sea ports, hence the existence of their entire Blacksea-fleet and Russian speaking population of alleged encroachment.
The Black Sea and its surroundings are full of natural resources and just last year the Ukrainian government was tendering explorations for fossil fuels (gas and oil) some 80km off of the Crimean coast. Plans that would have slightly rectified Ukraine's dependence from Russian oil and gas imports. If you recall said imports caused an international stir after Russia claimed the Ukraine had not paid their 'gas bill' and turned off access to it. Eventually a deal was signed by Timochenko to secure further flow and resolve said issue. The very same deal eventually led to the arrest and charge of Timochenko after she did not carry any political office. Her imprisonment was only recently lifted after the recent (revolutionary) events at the Maidan in Kiev.
Availability of maps is crucial but also difficult on this issue. The first (fig. 1 via) map shows a rough overview of oil and gas fields in the Ukraine as well as pipelines running through the country (mainly originating from Russia). The main gas fields in the Ukraine are to be found in the eastern Ukraine and around the Crimea (also see fig. 2). The second map (fig. 2 via) shows the gas and oil fields outside Crimea's coast.
An article in Business Week now describes exactly the current situation:
Without Crimea, Ukraine looks set to lose an important piece of its economic and energy future: valuable undersea oil and gas fields that lie just offshore the Crimean peninsula. Exploiting those Black Sea fields could help reduce Ukraine’s dependence on Russian gas imports.
And Big Oil had been interested: Before the overthrow of former President Viktor Yanukovych, Ukraine was on the verge of signing a deal with a group, including Exxon Mobil (XOM) and Royal Dutch Shell (RDS.B), that was prepared to spend $735 million to drill two wells off Crimea’s southwest coast. “Exxon and Shell are now in a legal limbo,” Chris Weafer of Moscow investment group Macro Advisory told Bloomberg News. If Crimea votes in a March 16 referendum to secede from Ukraine, the government in Kiev “may soon no longer have jurisdiction over the region.”
The so-called Skifska area that Exxon and Shell want to develop is part of an undersea field that extends westward along the Black Sea coastline to Romania. Within the area now under Ukrainian jurisdiction, however, “the most interesting exploration areas are all effectively [under] Crimean waters,” says Julian Lee, an analyst at the Center for Global Energy Studies in London. Losing control of those areas “would be a significant loss for Ukraine.”
Meanwhile ENI, the italian petroleum giant is also affected by the current situation, argues the following:
Italian energy group Eni (ENI:IM), which last year reached an agreement to explore off Crimea’s eastern coastline, says it doesn’t know how the crisis might affect its plans. “We wait to see if the situation gets normal, and then I would certainly get back in touch with the new authority there,” Eni Chief Executive Officer Paolo Scaroni told CNN in an interview last week. “We have been living through changing of governments in many countries in our life.”
See here ENI's press note on the production agreement with the Ukrainian government of last year: Link.
Another article in Bloomberg describes the connections and ramifications also for American petroleum companies involved. Exxon and Royal Dutch Shell planned on investing some "$735 million drilling two wells about 50 miles (80 kilometers) from the region’s southwest coast."
Exxon sought the rights to drill the Skifska license off Ukraine after discovering the Domino field in 2012 in neighboring Romania, a find large enough to offer that country the prospect of becoming a gas exporter. Exxon Mobil Senior Vice President Andrew Swiger said in an investor presentation last week it still remains interested in getting permission to explore off Ukraine.
Aslo Bloomberg notes the effect of the crisis on the potential of the Ukraine becoming more independent of Russia's exports.
For the government in Kiev, offshore exploration is part of a strategy to wean itself off gas imports from Russia, which supplies more than 50 percent of Ukraine’s fuel. It also signed shale-gas exploration deals with Shell and Chevron Corp. and has worked to reduce consumption.
The referendum’s other option, to increase Crimea’s autonomy while remaining a part of Ukraine, could also inject uncertainty into Black Sea oil and gas rights, according to Richard Mallinson, a London-based geopolitical analyst at Energy Aspects.
Bloomberg further complied a list comparing the recent efforts of the Black Sea to the North Sea, where countries like Norway, the United Kingdom, Netherlands and Germany have extracted oil and gas for decades:
The push to drill the waters off Crimea was part of a wider campaign to explore for oil and gas in the Black Sea, where fewer than 100 wells have been drilled, according to data compiled by Bloomberg. That compares with more than 7,000 in the North Sea.
Compared to Business Week's estimation of the potential significance of the Crimea offshore endeavours:
Ukraine has estimated that oil and gas production from Skifska, along with another Crimean offshore area known as Foros, could reach the energy equivalent of up to 7 million tons of oil annually. That’s less than 10 percent of the oil and gas Norway extracts annually from beneath the North Sea. Still, it totals about 20 percent of Ukraine’s current annual gas imports, which come mainly from Russia and have been a longstanding source of friction between the two countries.
http://www.energy-pedia.com/country.aspx?country=221