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Ecologists: Prirazlomnaya unprofitability approaches $600 million

With falling oil prices, Arctic oil has become more unprofitable.

At an oil price of $60 per barrel, Russia’s only offshore oil-producing field in the Arctic, Prirazlomnaya, is unprofitable even with heavy state support.

A study made by the International Institute for Sustainable Development and the Norwegian consultant group Sigra Group for WWF shows that Gazprom’s Prirazlomnaya platform runs with a $579 million deficit, even with state support like tax benefits, provision of services at low prices, or construction of infrastructure at the expense of the state budget, WWF’s web site reads.

In July 2014 WWF conducted similar https://content.adfox.ru/transparent.gifcalculations based on an oil price of $100 per barrel, and even then the project would pay off only with heavy support from the state.

Production at the Prirazlomnoye field in the Pechora Sea started in December 2013. Field reserves are estimated to about 72 million tons of oil. In 2014 the platform delivered 300,000 tons. Peak production of five million tons is planned for about 2020. 

As previously reported, Prirazlomnoye is the world’s first project involving oil extraction on the Arctic shelf using a stationary platform. The field platform received the world’s attention in September 2013, when two journalists and 28 activists from Greenpeace, later dubbed “the Arctic 30”, were arrested and imprisoned in Murmansk for over two months following a protest against Arctic drilling.