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Exxon Mobil starts drilling in Russia's Arctic

U.S. oil giant Exxon Mobil began drilling in Russia's Arctic on Saturday, despite Western sanctions imposed on its Russian partner Rosneft, and was hailed by Russia's president as an model of "cooperation".

Although U.S. sanctions over the crisis in Ukraine are not designed to halt joint projects by Russian and U.S. companies, they nevertheless aim to starve Rosneft of dollar financing and ban access to modern technology.

Russia's Prime Minister Vladimir Putin (L) speaks with ExxonMobil President and Chief Executive Officer Rex Tillerson (R)
Alexey Druzhinin | AFP | Getty Images
Russia's Prime Minister Vladimir Putin (L) speaks with ExxonMobil President and Chief Executive Officer Rex Tillerson (R)

"Today, commercial success is driven by efficient international cooperation," Vladimir Putin told Rosneft CEO Igor Sechin and Glenn Waller, ExxonMobil's lead manager in Russia, on a video conference call from his Black Sea residence in Sochi.

"Businesses, including Russian and foreign companies, perfectly realise that and despite certain current political difficulties, pragmatism and common sense prevail, and we are pleased to hear that," he said.

Exxon brought a rig from Norway to drill Russia's first well in the Kara Sea and its move will be seen as a vote of confidence in Rosneft, run by a close ally of Putin's, Igor Sechin, who has also had sanctions imposed on him by Washington.

Read MoreNo grounds for US sanctions: Rosneft chief Sechin

"We of course welcome this approach (to cooperate) and are from our side are open to expand our cooperation," Putin said.

"I am convinced that the joint projects between Rosneft, Exxon Mobil and other companies will benefit our national economies, will contribute to strengthening the global energy situation," he said.

Waller, who spoke Russian, said the company was keen to keep working in Russia.

"Our cooperation is a long-term one," he said. "We see big benefits here and are ready to work here with your agreement."

The United States and the European Union have introduced sanctions, from asset freezes and visa bans for businessmen and officials thought close to Putin, to limits on access to Western capital for Russian state banks over what

Western powers say is Moscow's role in the Ukraine crisis. Moscow has responded by banning food imports from the United States, European Union, Australia, Canada and Norway, with Prime Minister Dmitry Medvedev threatening further counter-sanctions if the West presses ahead with more penalties.

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