The US gas company ExxonMobil started drilling for oil offshore in Russia's Arctic on Saturday after signing a deal with Russian president Vladimir Putin, despite U.S. and European Union sanctions.

The U.S. Department of State previously said it is banning "export, reexport or foreign transfer" of items tat could be used in Russia's energy industry including projects involving oil exploration and production. In spite of this, ExxonMobil embarked on a joint venture with Russian government-owned oil company Rosneft for Arctic crude.

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ExxonMobil brought in an oil rig from Norway to the Kara Sea in northern Russia to set up drilling operations there. It is unclear how the cooperation is working due to the sanctions, however both Russia and ExxonMobil are confident.

In a statement, Putin said Russia welcomes the cooperation and is ready to expand its ties with ExxonMobil.

ExxonMobil lead manager in Russia Glenn Waller voiced a similar opinion, saying that the cooperation between Russia and ExxonMobil is "a long-term one".

The drilling project is expected to cost $700 million. Drilling is anticipated to continue for about two months.

The site, a geological formation underwater called the Universitetskaya, Rosneft estimates to hold up to 9 billion barrels of oil.

James Henderson, senior research fellow at the Oxford Institute for Energy Studies, said "The well is very important. It'll probably be one of the most interesting wells in the global oil industry for many years." 

Environmentalist groups are worried about the drilling due to the precarious nature of the Arctic.

University of Southampton oil spill expert Simon Boxall, who had a leading role in the analysis of the BP oil spill, spoke to The Guardian in November saying that disaster would be "inevitable". He added that he would expect a "major spill" in the future.

TagsOil rig, Russia, Environment, Activist, Arctic, ocean currents