Total and Lukoil in talks to jointly develop Russian shale

France’s Total is reportedly in talks with Russia’s Lukoil to develop a shale formation in the Russian Urals – estimated to be the biggest in the world. It's evidence western businesses want to work with Russia, casting off political talk of sanctions.

Russia’s largest private company Lukoil is discussing a joint venture with Total over so-called “difficult oil” in its giant but still unproven Bazhenov formation, the Financial Times (FT) cites sources familiar with the matter.

The deposit holds a huge portion of Russian shale gas and oil, and is the biggest in the world according to the US Department of Energy.

Recent threats by western politicians to impose sanctions against Russia haven’t affected the plans of the two companies to cooperate, as Total and Lukoil were discussing a tie-up before Crimea became a part of Russia.

Another of Russia’s big business allies - Siemens - said earlier this week that its investment in the country, including cooperation with Russian Railways and Gazprom, will go on as scheduled.

Until now Lukoil has always chosen to develop its assets in Russia alone, which means sealing the deal with Total would mean a shift in its strategy.

“Lukoil is the only large Russian oil company without a major western partner,” as the FT quotes Karen Kostanian, oil and gas analyst at Bank of America Merrill Lynch in Moscow.

Total is now represented in Russia through a 16 percent stake in Novatek, the country’s second biggest gas producer after Gazprom. Now the investment is under scrutiny, as Novatek CEO Gennady Timchenko was included on the US sanctions list. Timchenko owns 23 percent of Novatek.