Russia draws up state program for shelf development

The Prirazlomnaya oil drilling platform in Murmansk before transport to the Pechora Sea.Photo: Thomas Nilsen

The Russian Government will next week discuss a draft for a grand-scaled state program for exploration and development of the continental shelf.


The program, which is prepared by the Ministry of Natural Resources, is drawn for the period to 2030 and will take up to RUB 6,4 trillion (up to €153 billion) to accomplish.

The program suggests that the larger part of the capital investments – RUB 2230 billion – will be put in exploration and development of fields in the Barents Sea. RUB 1440 billion will be used in the Pechora Sea and RUB 600 billion and 800 billion in the Kara Sea and Sea of Okhotsk, respectively.

According to the program, the Russian shelf will produce 40-80 million tons of oil and 190-210 billion cubic meters of gas annually. This is 8-16 percent of the total current oil production and 32-35 percent of the gas production. There are no possibilities to produce these amounts on the mainland, Yelena Dyachkova of the Ministry of Natural told Rossiyskaya Gazeta.

- A full-scale development of the Russian shelf will not be possible without private investors, and they will not come if we don’t change the tax regime that is in place today, says Dyachkova. With today’s tax regime only four fields on the shelf are profitable. It will cost from 13,7 to 27 USD to produce one barrel of oil on the shelf, including the Caspian Sea, while a barrel from West Siberia costs only 5-7 USD, according to the consultant.

According to the program that is up for discussion in the government, the state will finance regional geological surveys and take all costs connected to creation of necessary infrastructure for surveillance, communication, navigation and environmental measures. This will make a total of 1 trillion rubles, or 21 percent of all costs.

Getting licenses should become easier
The program also suggests splitting up licenses, so that geological surveys will be regarded as a segregated type of mineral resource use. Under the current situation, companies have to get so-called combined licenses which include surveys, exploration and exploitation. If the program is accepted, private geological companies will be able to sell their results to oil companies.

Another new suggestion in the program is that companies that wish to work on the Russian shelf will not have to have five years of experience from working in Russia before they can get a license for shelf work. They still need five years of experience, but it can also have been achieved abroad. This will make it possible for companies like Zarubezhneft to apply for licenses.

Companies that want to acquire licenses to work on the Russian shelf will still have to have a minimum of 50 percent Russian state ownership. Foreign companies and Russian private companies will have to conclude contracts with Gazprom of Rosneft.

Read also: Tax breaks for the Kara Sea