The Rothschild family is to return to the oil business in the former
Soviet Union, a century after its hasty exit before the Russian Revolution.
It has joined Vanco, a Texas-based oil company, to win a tender from the Ukrainian
Government to drill for oil in the Black Sea.
The investment is being made by JNR Eastern Investment (which stands for Jacob
and Nathaniel Rothschild), the Rothschilds’ Eastern European investment
JNR and Vanco have pledged to invest a minimum of £60 million in exploration,
although Ukraine says that these costs are likely to be nearer £400 million
— and if large oil or gas deposits are found, investment costs could reach
as much as £1.5 billion.
The area that the consortium will explore requires deep-sea drilling, sometimes
at depths of up to two kilometres (1¼ miles). It has not been explored
until now because deep-sea drilling technology has been developed only recently.
A Vanco source in Kiev said: “The key to deep-sea drilling is to be sure
of your geology. We bought a seismic [survey] of the area, and we’re very
confident there are deposit structures there, possibly as big as structures
in the Caspian Sea. This is potentially a huge project.”
Vanco and the Rothschilds beat many bigger oil companies to win the tender,
including ExxonMobil and Shell.
The Black Sea project is one of a number of efforts by Ukraine to become more
independent of Russian gas. Gazprom, the Russian oil and gas giant, doubled
the price that Ukraine pays for gas in January and is threatening to double
it again in July. A government spokesman said that that Gazprom-owned companies
had looked to buy the rights to Black Sea drilling “in order to bar Ukraine
from an alternative source of oil and gas”.
Vanco sources said that, if any oil was found, a lot of it would go to supply
Ukraine’s domestic energy needs.