INADEQUATE GEOLOGICAL PROSPECTING OPERATIONS MAY CAUSE HYDROCARBONS PRODUCTION CRISIS

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MURMANSK, November 17 (RIA Novosti) - A lack of federal financing in the sphere of geological prospecting may lead to a crisis situation as regards the reproduction of hydrocarbons reserves in Russia as early as the 30s of this century.

Oleg Mnatsakanyan, general director of the state unitary company (GUP) Arktikmorneftegazrazvedka engaged in geological prospecting for oil and gas on the Arctic shelf, made a statement to this effect at the international conference "Oil and Gas of the Arctic Shelf 2004".

"In recent years, no funds, or meager funds, have been allocated from the budget to finance geological prospecting operations. This hinders work to restore the base of hydrocarbon resources in Russia," Mnatsakanyan said.

In his words, no one in Russia is coordinating or planning to increase raw materials reserves, either on land or on sea. "Last year, for instance, oil production in Russia exceeded the increase in oil reserves, which is an alarming factor," Mnatsakanyan said.

He explained that, according to current estimates, Russian geological prospecting operations must be financed to the tune of 26 bln roubles a year (with one dollar being roughly equivalent to 28.6 roubles). At the same time, 17-18 billion roubles a year are needed to finance geological prospecting on the Arctic shelf where up to 80% of hydrocarbon reserves are concentrated today.

Valery Kaminsky, general director of the all-Russia research institute of oceanology, pointed out that only 0.3% of the funds received from hydrocarbons production is invested in geological prospecting operations in Russia. In industrialised countries, this indicator is 5-7%, he noted.

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