Gazprom Expands Arctic Offshore Exploration

By Ben Priddy, May 8, 2013

WEB EXCLUSIVE, Moscow. Russian Prime Minister Dmitriy Medvedev signed a new government decree, published May 3, that grants Gazprom exclusive development rights for four new offshore fields in Russia's sector of the Barents Sea. All four fields combined are expected to hold more gas than the Russian company produced in 2012, according to RIA Novosti. Gazprom filed applications at the end of last year for the right to develop 20 offshore blocks in Russia's Arctic zone, but lost three bids to Rosneft. Still, the Russian gas giant will pay only 9 billion rubles ($290 million) for the four fields that hold an estimated 1.8 trillion cubic meters of natural gas. Last year, Gazprom produced a total of 655 billion cubic meters, according to official numbers.

The licenses grant Gazprom the right to explore and develop reserves at the Demidovskiy, Medvezhiy, Fersamanovskiy gas fields and the Ledovoye gas condensate field. Gazprom has drilled a total of four wells and conducted 3D seismic mapping of over 3,000 square kilometers in the Arctic offshore since 2011, according to the company's website. It predicts that Russia's Arctic shelf holds more than 100 billion tons of oil equivalent, 80 percent of which is likely gas, and it has focused exploration efforts off the coast of the Yamal Peninsula, in the Tazov Bay, and near Kamchatka and Sakhalin in Russia's Far East.

The company announced at the end of April that it will begin production at two new offshore fields in 2013. The Kirinskiy gas condensate field is part of Gazprom's Sakhalin-3 project and will be the primary resource base for the Sakhalin-Khabarovsk-Vladivostok gas transport system in Russia's Far East. Sakhalin-3 total gas reserves are estimated at 1.4 trillion cubic meters, primarily located in the Kirinskiy block in the Sea of Okhotsk. Gazprom subsidiary, Gazprom Neft, also plans to produce it's first oil this year at the Prirazlomniy field in the Pechora Sea, located in Russia's northern Arctic zone.

State-owned corporations Rosneft and Gazprom currently hold 80 percent of the oil and gas resources on Russia's continental shelf. Yet, neither company has begun commercial drilling in the Arctic. Gazprom's licenses for the four new offshore blocks run through 2018.

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