From the North Sea (NT): Seadrill-owned North Atlantic Drilling’s $4.25bn package of drilling contracts with Rosneft is beginning to unravel under the strain of Western sanctions imposed on Russia due to its interventions in Ukraine.

The $1bn five-year contract for West Navigator, which was due to come into force this summer, has been cancelled by Rosneft, leaving the drilling contractor with the headache of finding new work for the drillship, which is currently idle, at a time when the rig market has collapsed due to plummeting oil prices.

A two-and-a-half-year contract for NAD associate company Northern Offshore’s jackup Energy Endeavour has also been cancelled. The rig’s contract with Wintershall in the Dutch sector was due to end in March. Late last year Rosneft cancelled contracts for Norwegian anchor-handlers and supply vessels (31/18). It also agreed with NAD to postpone completion of the rig contracts until May (31/17), so it remains to be seen whether the deals for semis West Alpha and West Rigel, as well as two other jackups, are still extant at that time.

ExxonMobil, which together with Rosneft discovered the Pobeda (Victory) field in the Kara Sea last year just before sanctions forced the two companies to disband their partnership, claims to have lost $1bn due to the suspension of its Russia joint ventures. For its part Rosneft has requested extensions of 18 to 24 months on 12 Arctic licences due to the difficulty of funding exploration activities following the withdrawal of Western partners.

According to Russia monitor Barents Observer, there are signs that Moscow will open the way for Lukoil, a private company, to participate in offshore Arctic licences. Private Russian companies are currently excluded. Lukoil could bring welcome investment, but not the Western technology, equipment and knowhow that is lacking due to sanctions.