Russia looks for private boost to its Arctic energy monopoly
By Dmitry Zaks, AFPMOSCOW -- Stalling production and global warming are seeing the Russian government mull breaking up its Arctic energy monopoly and allowing independents to survey some of the world's most coveted oil and gas fields.
January 21, 2013, 12:28 am TWN
The idea — debated at a top but private cabinet meeting this week — is still nascent and opposed firmly by the state's natural gas supplier Gazprom and main oil provider Rosneft.
But it could see cash-flush private players one day explore forbidding northern expanses that hold as much as 550 billion barrels of oil equivalent — nearly eight times Russia's current proven reserves.
Any breakthrough could in turn transform a global market that will already see major changes from growing exports of liquefied natural gas from North American shale deposits.
“Gazprom and Rosneft have got everything they have asked for — 80 percent of the (Arctic) shelf,” said Sberbank Investment Research analyst Valery Nesterov.
“They got the fields and now are sitting on them,” said the analyst.
“There must be a procedure for taking back these licenses, and that it what the ministry of natural resources is trying to do.”
Russia's slowly melting ice shelf stretches along the Arctic Ocean from the Barents Sea near Norway to the Chukchi Sea opposite the coast of Alaska.
The country's immediate problems are slightly different in the oil and gas sectors due to both global market conditions and existing natural resource supplies.
But the roots of both reach back to a strong state system that forbids independents from controlling offshore projects or getting to access to fields that were claimed but remain untouched.
“The pace of the shelf's geological survey work is not sufficient,” Prime Minister Dmitry Medvedev admitted in his opening statement at Tuesday's energy meeting.
“We are studying various ways we can speed up geological survey work.”
One of the biggest factors behind the state's slow Arctic development has been the monumental risks and costs involved.
And those are especially hard to take on at a time of global economic turmoil and lagging energy consumption.
Russia natural gas exports to Europe actually fell by more than one percent last year. Fitch Ratings warned that “Gazprom's sales are likely to fall further in 2013” as the continent's economic woes rage on.