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What has frozen Russian projects in the Arctic: sanctions or oil prices?

Photo: ru.arctic.ru

The EU sanctions stopped Russian oil and gas operations in the Arctic and affected negatively the country's entire oil sector. This was stated by EU Ambassador at Large for the Arctic, Marie-Anne Coninsx.

According to Coninsx, Russia needs European technologies for offshore drilling. The sanctions affected the sector and froze development, she told the Prime news agency.

Sanctions of the EU and the US were imposed in 2014 after accession of Crimea and beginning of the conflict in the southeast of Ukraine. Then the American ExxonMobil was forced to suspend its projects in the Arctic and the Black Sea with Rosneft, while Russian companies slowed down activities on exploring and developing Arctic licensed areas.

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"Have the sanctions stopped the work in the Arctic? I would say that this is a big exaggeration. The only operating Prirazlomnoye field was put into operation before the sanctions, and work is still continuing on it. At the time of imposing the sanctions, seismic survey operations were carried out on the rest of the projects, and even then, even at $ 110 per barrel of oil, they were unprofitable for the development," senior analyst of the National Energy Security Fund Igor Yushkov said. “The idea was that oil prices would rise to $120-130 within 70 years, and the development of technologies would reduce the cost price. When oil prices fell to $40, there was no question of active development of the Arctic at all. Now the companies, if they even do the work, but minimal, and only within the framework of the existing license agreements. No wonder they asked the Ministry of Natural Resources to postpone active work for a later period."

The expert believes that the low oil prices have suspended the work of Russian companies in the Arctic. "As for technology, equipment manufacturing and respective competencies are rapidly spreading around the world. Yes, indeed, Norwegian technologies are unrivaled all over the world, (by the way Norway is not part of the EU), but the Chinese are catching up with them. An example is a Chinese drill rig for Rosneft and Statoil in the Sea of Okhotsk. And in five-year time, it is quite possible that they will be able to compete quite freely with the West," said the expert.

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