Total Agrees to Lukoil Shale Deal, Brushing Off Russia Sanctions

US Sanctions, look at the size of the deal. Screw them. Money talks, BS walks.

The French look after the French, no real surprise.

Photographer: Andrey Rudakov/Bloomberg

By Tara Patel
and Stephen Bierman

23 May 2014

Total SA (FP) agreed to seek shale oil in Western Siberia with OAO Lukoil (LKOD), brushing off U.S. and European sanctions against Russia over its annexation of Crimea.

Chief Executive Officer Christophe de Margerie signed the deal at the St. Petersburg International Economic Forum in a demonstration of Total’s commitment to Russia, after officials from companies including Citigroup Inc., Morgan Stanley and ASA Statoil withdrew from the meeting.

Total and Moscow-based Lukoil will set up a venture to seek so-called tight oil in the Bazhenov area of Siberia under their agreement, the French company said in a statement. Siberian shale has “huge potential,” de Margerie said. Investment in the venture will be $120 million to $150 million in the first two years, according to Lukoil CEO Vagit Alekperov.

Total says its Russian business isn’t affected by sanctions against the country, including on Gennady Timchenko, shareholder of OAO Novatek (NVTK) in which the French oil producer holds a stake. De Margerie said last week it was “business as usual” even as the U.S. and Europe ratcheted up restrictions against Russia following its annexation of the Crimean region of Ukraine. CEOs from Eni SpA and Royal Dutch Shell Plc also attended the St. Petersburg forum.

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