Exxon, Rosneft in joint Arctic oil project despite sanctions on Russia

US oil giant Exxon Mobil began drilling for oil in the Russian Arctic yesterday with local partner Rosneft, despite sanctions imposed on the Russian company by Washington over the crisis in Ukraine.

Russian President Vladimir Putin praised the US$700 million joint project as an example of cooperation.

Although US sanctions are not designed to halt such joint projects, they nevertheless aim to starve Rosneft of dollar financing and stop it accessing modern technology.

"Today, commercial success is driven by efficient international cooperation," Putin, speaking from his Black Sea residence, told Rosneft CEO Igor Sechin, who is subject to US sanctions, and Glenn Waller, Exxon Mobil's lead manager in Russia.

The European Union imposed a third round of sanctions last month, restricting the export of equipment used for offshore oil production to Russia after its relations with Europe and the US deteriorated to the lowest point since the cold war over the Ukraine conflict. That has not stopped Exxon because the contract to hire the rig was signed before sanctions were announced.

"In the area of oil, the sanctions are more symbolic perhaps at this stage, but if they remain in place for a long period then they will have some significant consequences," said John Lough, an associate fellow at Chatham House, a London-based foreign-policy research group.