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Putin To Bail Out Russian Oil Industry

Putin To Bail Out Russian Oil Industry

Russia’s President Vladimir Putin has…

Russia Could Allow Private Oil Firms To Explore Arctic Shelf

The Russian ministry of natural resources is open to the idea that private oil and gas firms could be allowed to explore Russia’s Arctic shelf, where currently only state-held firms Rosneft and Gazprom have the right to operate, Russia’s Natural Resources Minister Dmitry Kobylkin told news agency TASS in an interview published on Wednesday.

Currently, it is difficult to assess how much interest the Arctic shelf could draw from private companies, given the relatively low price of oil, the minister told TASS on the sidelines of the ongoing Eastern Economic Forum (EEF) in Vladivostok.

“For now, we understand very well that Russia’s Arctic zone has not been researched well enough. Of course, we would want to research it more thoroughly,” Kobylkin said.

However, the Russian government cannot afford to invest in more exploration right now because Arctic operations are very expensive, the minister noted.

“Everything that pertains to the Arctic is very expensive,” he told TASS.

“Maybe it will be feasible to open the gates as wide as possible for those who would want to participate in this. In any case, we do not risk anything here,” Kobylkin said.

Lukoil, Russia’s second largest oil producer behind Rosneft, showed interest in the Arctic in the past when oil prices were much higher, the minister said, adding that he can’t speculate what Lukoil thinks of this idea today.

The ministry of natural resources will come up with an official position in the near future on who should explore Russia’s Arctic, Kobylkin said.

Russia has plans to develop resources in the Arctic, even after U.S. sanctions stalled development, and forced western companies, including ExxonMobil, to pull out. Rosneft plans to develop an Arctic cluster of oil fields over the next five years, while Novatek, Russia’s largest private natural gas company, will receive a tax deduction of about US$600 million (40 billion rubles) from the regional budget of Yamal-Nenets and US$1.5 billion (100 billion rubles) from the federal budget to build an LNG export terminal in the autonomous region in northwestern Siberia.  

By Tsvetana Paraskova for Oilprice.com

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