Medvedev Set to Decide Fate of Russia's Offshore Drilling in Yamal

January 15, 2013

The fate of Russia's offshore drilling could be decided today at a government meeting in Noviy Urengoy, one of the country's largest gas fields holding an estimated 3 trillion cubic meters of reserves, according to RIA Novosti and Kommersant.

Prime Ministry Dmitri Medvedev arrived at Noviy Urengoy today on a visit to an oil and gas condensate field to discuss offshore exploration in Russia's Far North.

Medvedev's visit will also witness the launch of commercial operations at the site currently being developed by Gazprom Dobycha Yamburg, a subsidiary of Gazprom, in the Yamal-Nenets Autonomous Region, according to RIA Novosti.

Yamal-Nenets is currently the largest natural gas-producing region in the world, accounting for approximately 83% of Russian production and 16% of world production, RIA Novosti reports.

The Russian government, as outlined in its Energy Strategy to 2030, aims to maintain stable production in Yamal through 2017, after which exploration and production offshore Yamal, in the Arctic, and in the Pacific Ocean in Russia's Far East, will begin to offset the decline in onshore production in the country's traditional drilling areas.

However, at present, only companies with majority state ownership and with prior experience in offshore drilling (i.e. Gazprom and Rosneft) are allowed to participate in the development of Russia's continental shelf.

In October, Russia's Ministry of Natural Resources proposed lifting restrictions on offshore drilling to allow international companies to participate in exploration and production of hard-to-reach reserves in these areas. The proposal has led to serious conflict between the Ministry and Rosneft chief Igor Sechin, who has voiced strong opposition to liberalization of Russia's offshore exploration and production, Kommersant reports today.

Sources tell the newspaper that officials will allegedly come to an agreement  on liberalization of the shelf at today's meeting between industry and government representatives at Prime Minister Dmitri Medvedev's meeting in Noviy Urengoi.