5 October 2012, 18:42

Foreign oil giants to be welcome on Russia’s Arctic Shelf

Foreign oil giants to be welcome on Russia’s Arctic Shelf

America’s ExxonMobil, Italy’s Eni and Norway’s Statoil have already joined projects with Gazprom and Rosneft to develop oil and gas on Russia’s Arctic Shelf. In compliance with a Russian law which bars foreign companies from acquiring majority stakes in such projects or obtaining a drilling license, they currently own approximately one-third stakes. Things, however, may be about to change.

In an interview with London’s Financial Times Friday, Russian Energy Minister Alexander Novak said that his agency is pushing an initiative scrap these restrictions as obsolete and counterproductive.

Senior analyst at the National Energy Security Foundation Dr Alexander Pasechnik says he does not expect rapid change:

"True, economic liberalization always brings progress. Today, even Russian-registered private companies are kept at bay from leading shelf projects. Similarly to their foreign counterparts, their stakes in such projects are usually limited to 33%. Unfortunately, the near future is unlikely to bring any change to these rules."

Independent business analyst Dmitry Lutyagin expects a boom in Russia’s oil and gas sector and great benefits to Russian companies in the event international energy giants are given access to Russia’s Arctic Shelf:

"Russian suppliers and service companies will certainly become regular business partners of these companies, which should help them to master latest offshore technologies and adopt modern management methods."

The Russian Energy Ministry says it hopes to attract $1trln worth of investment in the country’s oil and gas sector. It also believes that around 2030 Russia’s Arctic Shelf will be yielding 66mln tons of oil and 230bln cubic metres of natural gas each year.

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