With the current oil price, none of the offshore Arctic oil projects will be profitable. Both Gazprom Neft and Eni, the two companies which have production platforms in the area, will inevitably have to record major losses.
This week, the oil price dipped below $45 per barrel.
Gazprom Neft estimates that its Prirazlomnoye field, the first and only offshore project in the Russian Arctic, will need an oil price between $50-60 per barrel to make it into the plus, company Deputy Director Vadim Yakovlev says in a interview published at the company’s website.
Yakovlev still underlines that his company will continue with full steam in the project. In 2015, a total of 800,000 tons of oil is planned extracted and that volume will be increased to 1,8 million tons in 2017, he says. In 2014, the company produced 300,000 tons of Prirazlomnoye oil.
Gazprom Neft will also proceed as planned with its development of Novy Port, the oil field located in the inner parts of the Ob Bay, and already in 2016 intends to ship out 2,8 million tons through the Barents Sea and the Northern Sea Route, Yakovlev says.
The prospects are no brighter for Eni, the company which is about to get its Goliat platform into production on the Norwegian side of the border. According to newspaper Dagens Næringsliv, Eni will need an oil price of $90 per barrel to get the project in the plus.
As previously reported, Eni has spent the record-high sum of NOK 45 billion (€4,86 billion), on the development of the project. The platform has a production capacity of 100,000 barrels of oil per day and a storage capacity of one million barrels.
Also a number of planned oil projects are in trouble. The estimates of Dagens Næringsliv indicate that all the projected fields in Norwegian part of the Barents Sea will be unprofitable with the low oil price. Statoil’s Johan Castberg field will need an oil price of $67 and Lundin’s Alta/Gohta will need $67.20 to get into the plus, the newspaper writes.
Irrespectively of the oil price, however, both Norway and Russia proceed with plans for major hydrocarbon developments in their respective parts of the Arctic. The upcoming Norwegian 23rd License Round will offer a number of licenses further east and further north than ever before on the Norwegian shelf, and Russian monopoly companies Rosneft and Gazprom continue to fill up their license portefolios with new Arctic resources.