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No alternative to Arctic oil - minister

Natural Resource Minister Sergey Donskoy believes in both reindeer and Arctic oil.

Low oil prices and sky-high development costs notwithstanding, Russia’s Minister of Natural Resources says works on the Arctic shelf must be intensified.

“There is no alternative to the fields on the shelf”, Minister Sergey Donskoy underlines. “Even the socalled shale revolution in the USA has not stopped the companies’ urge, with support from the state, to extract Arctic oil”, he argues.

In a Facebook comment about the recent U.S. decision to let oil company Shell back in the American Arctic waters, Donskoy signals that offshore oil will remain a key issue for all the Arctic nations.

The Arctic can deliver necessary raw materials to the Russian economy, and also help bolster the country’s technology industry, Donskoy argues. For Russia, the development of Arctic oil is comparable with the Soviet space program of the 1960-1970s, the minister writes in the social media post.

Donskoy’s positive view on Arctic drilling is however in contradiction with the serious current crisis in the Russian offshore oil and gas program. Both state companies Rosneft and Gazprom have major problems with meeting their drilling and exploration obligations in the region.

As previously reported, Rosneft will this year not conduct any well drilling in the Kara Sea, nor in other parts of the Arctic. In addition, the company has requested government for a two years extension of license terms in 12 offshore Arctic projects.

In 2014, Rosneft together with ExxonMobil completed a unique drilling operation at the University-1 structure. The drilling revealed 130 million tons of oil resources and the well was subsequently named “Pobeda” (Victory).