Меню
  • $ 88.21 +0.04
  • 91.91 -0.64
  • ¥ 12.11 -0.10

Undevelopable shelf: Why does Russia's Natural Resources Ministry suggest suspending issue of licenses to state companies?

Russia’s Ministry for Natural Resources proposes to suspend the issue of licenses to fields on the continental shelf until the Bill introducing the procedure of auctions is approved. At present, only two government-controlled companies, Gazprom and Rosneft, are licensed to develop offshore fields. If passed, the bill may permit licensing of private companies too.

A representative of the Ministry of Natural Resource told Interfax that yet in June in a letter to government, Minister of Natural Resources Sergey Donskoy proposed to suspend new license rounds on the country’s shelf but handle license bids which already have been submitted by Gazprom and Rosneft.

▼ читать продолжение новости ▼

The idea to let private companies to the shelf was made yet last spring sparking discontent of the state companies. Gazprom called the idea nothing but lobbying for Lukoil where Minister Donskoy had worked for a while. As early as in March, Deputy Prime Minister Alexander Khloponin suggested that the government suspends issue of new licenses to Rosneft, as the company requested postponements in a number of its Arctic projects.

▼ читать продолжение новости ▼

Meantime, the government’s high interest in the offshore fields is not accidental.

“Everyone knows that the time of the West-Siberian fields is out. Recovery falls even on Vankor field. Some not-large fields ensure the growth. Actually, this sector has to choose between three ways,” says Igor Yushkov, a leading analyst at the National Energy Security Foundation. “One of the ways is to the Eastern Siberia that is explored by 10% only. The second is Bazhenov group where the estimated shale reserves are as much, if not more, as in West Siberia. And the third way is the shelf.”

Russia’s General Scheme of the Oil Industry Development for 2035 says the current recovery volumes cannot be preserved without development of offshore fields. It is anticipated that the offshore production will grow almost 4-fold by 2035 to 54 million tons of oil.

Under the present laws, Rosneft and Lukoil should work on the shelf and these companies have been actively receiving licenses until recently. Rosneft controls more than 50 offshore licenses from the Black Sea to Arctic fields.

“What practical results do we have today? Gazprom develops the Prirazlomnoye field and implements Sakhalin-II project, Rosneft - Sakhalin-I. That’s all,” Yushkov says adding that what Rosneft does on the shelf is mainly exploration works, not high-cost sinking.

Investments in exploration works has been reduced too, according to the Ministry of Natural Resources. As Sergey Donskoy reported to Vladimir Putin, investments halved last year. On the one hand, sanctions have either frozen or stopped new joint projects of Rosneft and ExxonMobil (U.S.), Statoil (Norway), and Eni (Italy). In addition, the Russian companies no longer have access to offshore recovery technologies. On the other hand, low oil prices have made the shelf projects unprofitable.

“The recovery on the Pobeda field opened by Rosneft and ExxonMobil was estimated at $120-$130 per barrel. The recovery costs for the shelves in other seas start from $60,” Igor Yushkov says.

This situation has made Gazprom to ask the Ministry to postpone the exploration works in the Barents Sea until 2025, which may break the recovery of 10% of gas in the country under the General Scheme of the Oil Industry Development by 2035.

So, what is behind the desire of, for instance, Rosneft to get more licenses but still do not let private companies to the shelf?

 “I think the dispute has intensified, as Rosneft is on the verge of privatization (the government will sell 19.5% of the company’s shares and the government share in it will reduce to 50% - editor’s note),” Yushkov says. “When this happens, the Rosneft leadership will be the first to announce that actions and liberalization are necessary, since it will no longer be able to get free licenses nearly without contests. Therefore, Rosneft is trying to get as many fields as possible until it is privatized. This immediately increases the capitalization of the company making it more attractive.”

The expert supports the government’s efforts to introduce auctions for the offshore fields. “I see no much difference between the state companies and private investors,” Igor Yushkov says. “Both must pay taxes and develop a safe technology of year-round recovery, if we are speaking about the Arctic shelf. There is no such yet. In other aspects, the competences of the companies little differ. As for Lukoil, in condition of sanctions its recovery may be even higher, since it controls many operating offshore projects.”

TOP-10
  • Now
  • Day
  • Week
  1. Russian frozen assets cannot be confiscated — Macron
  2. The Verkhovna Rada failed to vote for Zelensky in the presence of European commissioners
  3. WSJ: "Nord Streams" was blown up by Zaluzhny
  4. Alias Krasnov: ex-head of the National Security Committee of Kazakhstan again handed over the "Russian agent" of Trump
  5. Elon Musk accused Zelensky of murdering an American journalist
  6. Russian defense ministry: NATO uses situation in Ukraine to come closer to Russia’s borders
  7. Moscow to do its best to restore relations with Ukraine
  8. The UN General Assembly adopted an anti-Russian resolution on Ukraine
  9. Kiev says Crimea and Donbass cost $US50 billion and plans to adjudge that amount from Russia
  10. Georgia loses its 31st soldier in Afghanistan
  1. WSJ: "Nord Streams" was blown up by Zaluzhny 1066
  2. The Verkhovna Rada failed to vote for Zelensky in the presence of European commissioners 849
  3. Alias Krasnov: ex-head of the National Security Committee of Kazakhstan again handed over the "Russian agent" of Trump 452
  4. If Kiev mobilizes all citizens over the age of 16, then the war will last until 2044 - Budanov* 277
  5. Russian uranium was released to the USA in manual mode: exports resumed 270
  6. The official results of the Bundestag elections have been announced in Germany 203
  7. Zelensky said he was not interested in the murder of Gonzalo Lira 158
  8. The Sarah Wagenknecht Union Party is for Reason and Justice" passes to the Bundestag 139
  9. Trump did not come out to meet Macron at the entrance to the White House 130
  10. Elon Musk accused Zelensky of murdering an American journalist 104
  1. WSJ: "Nord Streams" was blown up by Zaluzhny 9522
  2. Alias Krasnov: ex-head of the National Security Committee of Kazakhstan again handed over the "Russian agent" of Trump 6089
  3. Musk has identified tens of millions of welfare recipients in the United States between the ages of 100 and 369 3844
  4. Zelensky opposed the holding of elections on Ukraine 3496
  5. Trump may withdraw US troops from the Baltic states amid talks with Putin — FT 2283
  6. Strange objects fall on Poland from space for the second day 2153
  7. If Kiev mobilizes all citizens over the age of 16, then the war will last until 2044 - Budanov* 2143
  8. Elon Musk accused Zelensky of murdering an American journalist 1235
  9. The Verkhovna Rada failed to vote for Zelensky in the presence of European commissioners 849
  10. "Trump gave us three weeks to sign the surrender of Ukraine" — Finnish MEP 729
All news

24.02.2025

Show more news
Aggregators
Information