DAVID GREENE, host:
And now, a story about big oil. Russia and Exxon-Mobile have reached an agreement that opens the way for oil exploration in the Russia's sector of the Arctic Ocean. The deal would allow the Russians access to projects in other parts of the world, as well, including the United States.
Russia's Prime Minister Vladimir Putin said total investment in the partnership could reach as high as $500 billion. And to talk more about the deal, we turn to journalist Julia Ioffe, who's covering the story in Moscow.
Julia, good morning.
Ms. JULIA IOFFE (Journalist, Foreign Policy magazine): Good morning, David.
GREENE: So what can you tell us about this agreement?
Ms. IOFFE: So the agreement basically allows Rosneft - which is a national oil company here in Russia - a more experienced international partner in exploring the Arctic. The Arctic has some of the largest untapped oil and gas preserves in the world.
And it brings online a co-investor who's experienced in drilling in such harsh climates. As I've heard from people here, drilling in the Arctic is like drilling on the moon, and it's very expensive, very risky.
GREENE: This deal is similar to one that fell through between Russia and British Petroleum, BP. What's the difference here?
Ms. IOFFE: British Petroleum and Rosneft were going to swap shares. They were also going to explore the Arctic together, but Rosneft wouldn't have gotten a presence in BP's other projects around the world.
GREENE: And part of the reason, as I understand it, that the BP deal fell through with this Russian, state-owned oil company, was there was a separate group of Russian investors who had made a deal on the side with BP?
Ms. IOFFE: That's right. BP already had a venture in Russia with three local oligarchs. They were not brought in on the deal with Rosneft, and they were angered by it and went to court in Stockholm to block the deal.
GREENE: Western companies don't always have the best experiences in investing in Russia, partnering with Russian firms. A lot of critics in the United States suggest it's not the best idea to invest in Russia. Where do you see this deal going, and why is Exxon-Mobile taking this risk?
Ms. IOFFE: I think Exxon-Mobile is taking this risk because it doesn't really have many options left. Many of the world's oil wells have already been explored, or are being explored. This is one of the few places left in the world that's really untapped and unexplored.
Russia, for its part, was feeling kind of on top of the world in the middle of the last decade. Right now, Siberian oil fields are in decline, and an increasing part of the Russian budget, federal budget, is dependent on oil revenues. So it's kind of also in a place that it needs Western expertise if it wants to get access to more oil, and thus more federal revenues.
GREENE: And as you say, oil critical to the Russian economy. Vladimir Putin, the prime minister, makes this announcement, not President Dmitry Medvedev. There's a presidential election next year. Are politics at play here, that Putin comes out and makes a big deal of this?
Ms. IOFFE: Well, I think Putin's already - has been seen as the man ultimately in charge, not Dmitry Medvedev. He was also the man to give the blessing to the original oil deal between Rosneft and BP in January. When that fell through, it made everybody look bad, including Vladimir Putin. This is kind of him scrambling to make his image a little bit better.
GREENE: We've been speaking to Foreign Policy magazine's Moscow correspondent Julia Ioffe.
Julia, thank you.
Ms. IOFFE: Thank you, David.
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