But the deal is even more interesting from the Russian side since it gives Rosneft a share in an ExxonMobile-owned shale gas field in Texas. Thanks to hydrofracking and other advanced drilling techniques, shale gas and oil fields that were long thought to be near worthless due to the limitations of older drilling equipment have sparked an energy boom in the past few years. The glut of natural gas now coming to the world marketplace were enough to prompt current Russian Prime Minister and soon-to-be President Vladimir Putin to discuss the “threat” shale gas posed to the Russian energy sector during his annual address to the Russian Duma (parliament) last week, and order the Russian energy sector to “answer this challenge”. Rosneft seems then to be taking the “if you can't beat 'em, join 'em” approach with their partnership in ExxonMobile's Texas shale gas field. They become the latest in a line of foreign companies who have invested in similar American fields as a way of gaining practical experience in using hydrofracking, horizontal drilling and other advanced recovery techniques to access their own domestic shale gas and oil reserves.
There's also a sense of going back to the future for ExxonMobile in the Rosneft deal. In 2003, ExxonMobile was on the verge of signing a similar agreement with Russia's then-largest oil conglomerate, Yukos, when Yukos' chairman Mikhail Khodorkovsky was arrested on charges of tax evasion. Khodorkovsky had hoped that the partnership would literally provide him with a krisha (Russian slang for “protection”) in his increasingly hostile personal relationship with Vladimir Putin. Khodorkovsky was arrested before the Yukos-ExxonMobile deal could go through.
The Khodorkovsky affair could serve as a cautionary tale about doing big business deals in Putin's Russia, as could the Kremlin's forcing of Royal Dutch Shell to sell half their stake in a $20 billion natural gas project on Russia's Sakhalin Island to Russia's Gazprom. But Russia is jockeying for position with Saudi Arabia as the world's top oil producer, which means that despite the risks, the rewards could be huge for ExxonMobile.