March 22, 2012
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№ 2 (February 2012)

Lukoil Demands Access To Offshore Arctic

It is high time to abolish the current restrictions of offshore oil production in the Arctic, Lukoil argues. In an interview with the Financial Times, Lukoil President maintains that changes in federal legislation on Arctic shelf access now finally are in the pipeline.

By Barents Observer

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Lukoil, the biggest privately owned oil company in Russia, has long sought access to Arctic shelf resources. However, current federal regulations allow only state-owned companies with a minimum of five years of experiences from offshore developments permission to engage on Arctic shelf.

As previously reported, the upcoming changes have for some time been under preparations in the Ministry of Natural Resources. The Ministry is highly critical to the state companies’ slow development of their shelf licenses and wants “any Russian-registered investor” to be given access to exploration and drilling.

A number of legislative changes will be proposed in the Ministry’s Programme on Continental Shelf development until 2030, a document, which will be presented on 4 April, Kommersant reports. The programme reportedly proposes to drill a total of 290 new wells, conduct up to 930,000 long meters of 2D seismic studies, as well as up to 80,000 square meters of 3D seismic studies. A total of 1360 million tons of new oil reserves and 13,3 trillion cubic meters of new gas reserves are to be discovered in the period.

While the Natural Resource Ministry pushes for a liberalization of the shelf regulations, the Ministry of Energy is reportedly highly critical towards the proposed changes.

Meanwhile, the Ministry of Natural Resource has won the support from the highest level. In a recent government meeting, Vladimir Putin expressed dissatisfaction with the current regulation, which he said “staggers the development” of the shelf.

The current restrictions on non-state companies’ access to offshore projects have not hindered foreign companies from engaging on the Russian Arctic shelf. In joint ventures with Rosneft and Gazprom, the international oil majors ExxonMobil, Total and Statoil have engaged respectively in the Kara Sea and the Barents Sea. That is not well perceived by Lukoil. “It is very strange that foreign companies can engage in the development of offshore field, while Russian companies can not,“ Lukoil President Vagit Alekperov says, Vedomosti reports.
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