Government might stagger Rosneft’s Arctic expansion

Rosneft wants it all in the Arctic, but faces opposition from the government. Photo:

The quickly expanding oil company wants more licenses on the Arctic shelf. But the Russian government might say stop


The government of Dmitry Medvedev, which long has announced its intension to liberalize the currently rigid regulations on shelf development, is increasingly confronted by Rosneft and its powerful leader Igor Sechin. While the government wants to open up the resource-rich Arctic shelf for more companies, also private and foreign, Rosneft wants to fortify its shelf monopoly position.

In a meeting with Russian Deputy Premier Arkady Dvorkovich last week, Rosneft representatives highlighted their interest in another 14 Arctic licenses, most of them reportedly in the Laptev Sea. From before, the state-owned company controls 14 Arctic offshore licenses, among them to vastly rich fields in the Barents Sea and Kara Sea.

According to newspaper Kommersant, Rosneft has applied at the Ministry of Natural Resources for even more offshore Arctic licenses – as many as 24.

However, Dvorkovich is reluctant to grant Sechin’s oil company the additional resources. If the state company gets the licenses, it will alone control more than 75 percent of the Arctic shelf resources, the deputy prime minister said. In that case, there will hardly be anything left for the government to share with other companies under the new and more liberal shelf regulations.

The government argues that Rosneft will not get the licenses unless it commits itself to step up the exploration of Arctic waters and meet the government’s planned production volumes in the region. Commenting on the situation, leader of the Mineral Agency (Rosnedra) said that he had no remarks about Rosneft’s level of exploration in the Barents Sea and the Kara Sea, but that the company will have to step up exploration in the Laptev and Chukotka Seas. In the 14 licenses in question, the level of needed exploration includes 36 thousand km of 2D seismic studies and 9 thousand square km of 3D seismic mapping, Aleksandr Popov said. In addition, a total of 28 wells must be drilled, reports.

In the Barents Sea and the Kara Sea, the seismic mapping is not conducted by Rosneft itself, but rather by the company’s foreign partners; ExxonMobil, Eni and Statoil. If the state-owned company, now cash-strapped after the giant takeover of TNK-BP, is to commit itself to a large-scale exploration also in the Laptev and Chukotka Seas, it might have to ally itself with more foreign partners. Among them could be BP, which has long worked for major stakes in the Russian Arctic waters.

Among the potential partners is also Lukoil, the Russian private company, which continues to express its interest in offshore projects. Lukoil is reportedly bidding for several of the same fields in the Laptev Sea as desired by Rosneft and is offering $2.7 billion for four of the licenses, reports.