Chevron, the second-largest U.S. oil company, is planning to leave a $1 billion project with OAO Rosneft, Russia's largest oil company, in the Black Sea, adding to Rosneft's recent woes with Western oil companies. Last month, the Russian oil giant's share exchange with BP, Europe's second-largest oil company, collapsed.
Earlier this year, rumors began to swirl that Chevron (CVX) was mulling leaving the project with Rosneft dues to disagreements on a variety of fronts. Chevron and Rosneft were expected to explore for oil in the Shatsky Ridge, a deepwater region of the Black Sea thought to contain six billion barrels of oil, according to the Wall Street Journal.
Chevron lost enthusiasm for the project because Rosneft expected the American company to pay all of the exploration costs, but only retain a 33% stake in the venture. California-based Chevron also found the geology for the project to be more difficult than previously thought, the Journal reported.
While Chevron's Shatsky Ridge plans with Rosneft appear dead, at least for now, the company remains a contender to perhaps replace BP (BP) as a possible partner for Rosneft in exploring Russia's oil-rich Kara Sea.