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Rosneft begins oil prospecting off Norway despite sanctions

Russian state oil giant Rosneft, despite tightening Western sanctions, said Monday it had started exploring for oil in a joint project with Norway’s Statoil.

The two companies “started exploration operations at the Pingvin License PL713 prospect in the Norwegian section of the Barents Sea,” Rosneft said in a statement.

The test well will descend 422 metres (1,385 feet) through the Arctic waters and then bore through the soil to a total depth of 1,516 metres in what Rosneft called “the most promising and prolific area of the Barents Sea next to the discovered Castberg fields.”

A Rosneft subsidiary won a 20 percent stake in the prospect area in a tender held by Norway’s oil ministry last year, and the results from the test well are to be analysed by the end of the year.

Statoil this month said it had failed to find oil during a summer drilling campaign in the remote Norwegian Arctic.

Norway, which is not an EU member but is part of the European Economic Area free trade zone, has followed Brussels in imposing sanctions against Russia over its alleged backing of rebels in east Ukraine.

They include restrictions sales of technology and equipment used for offshore Arctic oil drilling projects.

Washington has targeted state-controlled Rosneft, preventing it from raising anything but short-term funding in US markets, for its paramount role in Russia’s oil industry and because its chief Igor Sechin is a close ally of President Vladimir Putin.

The US sanctions appear to be hurting the company’s finances, with Rosneft appealing to the government for help to refinance part of $45 billion (34 billion euros) of debt it took on as a part of its drive to become Russia’s top oil company.

The US restrictions did not prevent Rosneft from beginning to explore for oil in the Kara Sea off the northern coast of Siberia earlier this month in a joint project with US oil major ExxonMobil.

The EU technology sale restrictions only touch future projects and not those signed before the sanctions were agreed at the end of last month.