Exxon Mobile, America’s largest company, won a major contract to explore for oil in the Arctic Ocean (August 31), beating competitors such as BP (British Petroleum) which had been trying to land the deal since early this year.

The agreement gives the Russian state owned oil company Rosneft access to some of Exxon’s deep water oil fields in the Gulf of Mexico and onshore fields in Texas, Exxon’s home state.  The accord, although not finalized, was signed in the Russian resort of Sochi in the presence of Prime Minister Vladimir Putin.

Despite the scale of the investment (estimated at tens of billions of dollars) and the potential for exploration, the deal is nevertheless not without risk. Russia has reneged on deals with Western oil companies before.

In 2006, it compelled Royal Dutch Shell to sell 50 percent of an offshore development in Sakhalin to Gazprom, a state company.  In 2003, a deal under discussion between Exxon and Yukos, the largest Russian oil company at the time, foundered when CEO, Mikhail Khodorkovsky was jailed on charges of tax evasion and the assets of Yukos were taken over by Rosneft.

On the same day as the Exxon-Rosneft accord was signed in Sochi, police in Moscow conducted a raid on BP’s offices in connection with a lawsuit filed by a group of Russian oligarchs who objected to BP dealing with Rosneft. The incident does not offer much assurance that things have changed all that much in Russia.