Russia Goes All In On Arctic Oil Development

Tyler Durden's picture

Authored by Tsvetana Paraskova via OilPrice.com,

Neither sanctions nor persistently low oil prices are hindering Russia’s ambitions or plans to develop oil resources in its sections of the Arctic.

In April, state-controlled oil giant Rosneft started drilling the northernmost well on the Russian Arctic shelf in the Khatangsky license area in the Laptev Sea. In June, Rosneft struck first oil in the Eastern Arctic in this license.

Earlier this month, the oil firm said that recoverable reserves at the field exceed 80 million tons of oil, which is equal to around 586.4 million barrels. Geological data point to reserves at the field at 298 million tons of oil, or some 2.184 billion barrels, and the oil is high quality - light and low-sulfur, according to Rosneft.  

The Russian oil giant - whose CEO Igor Sechin is a close ally of Vladimir Putin - continues to drill at the field to study its geology, search for more oil, and define future drilling strategies at the license, Rosneft says.

Rosneft and Gazprom’s oil unit Gazprom Neft are the only two companies allowed to drill in the Arctic offshore under Russia’s legislation.

Gazprom Neft operates the only oil-producing platform in Russia’s Arctic currently. The Prirazlomnoye oil field in the Pechora Sea started pumping oil back in late 2013. The field is estimated to hold 70 million tons of oil, or 513 million barrels, with annual production averaging 5.5 million tons (40.3 million barrels) at full capacity. Related: Is The Aramco IPO On The Brink Of Collapse?

Rosneft also plans to resume drilling in the Barents Sea next year and in the Kara Sea within two years, thus committing itself to conduct drilling works across the entire Russian section of the Arctic.

Rosneft holds 28 licenses in the Russian Arctic shelf that are estimated to have combined reserves of 34 billion tons of oil equivalent, or 249.22 billion barrels. Since 2012, Rosneft has invested $1.74 billion (100 billion rubles) in Arctic exploration, and will invest in 2017-2021 another $4.354 billion (250 billion rubles).

Russia, for its part, has stated that Arctic oil and Arctic development are priorities in its policies, and is supporting development with financing in a kind of political message that sanctions won’t deter its Arctic oil ambitions.

The U.S. Treasury sanctions list from 2014 prohibits the exports of goods, services (not including financial services), or technology in support of exploration or production for Russian deepwater, Arctic offshore, or shale projects that have the potential to produce oil. 

While Western banks are still evaluating the potential impact of the latest round of U.S. sanctions on Russia from this summer, Moscow is committing funds to Artic development. At the end of August, Prime Minister Dmitry Medvedev said that Russia will finance the development of the Artic continental shelf and the economy of the local areas with more than $2.787 billion (160 billion rubles) by 2025. He said Russia’s program for Arctic development rests on three pillars: boosting economic growth, developing sea infrastructure, and developing the continental shelf with modern technology and equipment. Related: Oil Markets Fear Iraqi Escalation

As part of that program, in 2021-2025, the government will fund $414.5 million (23.8 billion rubles) for a program to build oil and gas equipment and technology and industrial machinery for exploration and development in the Arctic.

According to experts cited by Rosneft, the Arctic shelf is expected to account for 20-30 percent of Russia’s total oil production by 2050.

It’s not clear who will need Russian Arctic oil in 2050, but in the shorter term, Russia is betting on the Arctic, and Rosneft’s exploration success this year could really pay off. 

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Zen Xenu's picture

Russia laughs at the CO2 BS babbled by Greenies.

DownWithYogaPants's picture

Our lourds and masters merely want to create artificial scarcity.

Solar - unviable sort of - but sort of in Nevada - Warren Buffet Inc gripes and makes solar difficult

Wind? - totally unviable as seen by the still wind turbines - No regulation

Hydro - economically viable - HIGHLY REGULATED

Oil - viable for your car - regulated / taxed  - Not viable for electricity so no regulations on generating your own electricity

Coal - viable - cheap electricity - they are shutting this down

....................See the pattern?..................

Even a leftard greeny can see a pattern here if they are intellectually honest which it very hard to find in a leftard.

tuetenueggel's picture

correction: No leftard greeny sees a pattern here. Intellectual honesty is

impossible to find in a leftard.

 

medium giraffe's picture

Geo and LFTRs are a pretty good idea too.  But noooooooooo, muh OPEC & GE.

Neochrome's picture

Yeah, because fracking is soooo much better...

DownWithYogaPants's picture

It is compared to what's coming.  What till the petrodollar busts and your broken down lefty ass has to get a job in a factory for a severely devalued dollar.  You'll be begging for more fracking if you have an ounce of sense in your head.  Oopps.  Houston we have a problem.

tuetenueggel's picture

Oh yeah, it´s the elon musk principle:

Production at high expenses, selling with enormous losses per piece and that brings lots of

money. The invention of a financial perpertuum mobile.

Neochrome's picture

Factory job in US? Fucking retard...

11b40's picture

When you can't afford imports, things will be made here again.

Cardinal Fang's picture

It is one cold, dark bitch up there.

dogismycopilot's picture

lot of nice, young, warm, white Russian girls in Murmansk.

use your imagination. 

just the tip's picture

use your map.

this license is about 15 degrees north of murmansk and about 4 time zones, russia has eleven, to the east.  it is the western most part of siberia.  it is what we in the US would call flyover country.  and yes i am aware of the curvature of the marble and time zones at that elevation are not what they are farther south.

those russian girls will stay in murmansk and those drillers will have to use your imagination.

Zen Xenu's picture

Hydrocarbons still provide the best bang for the buck as far as energy.

Solar and wind conversion to electricity is not consistent, and much more expensive if not for subsidies and tax credits.

DownWithYogaPants's picture

For electricity it might just be carbons.

tuetenueggel's picture

Low oil prices don´t bother Russia.

Reason ? Less moeny for bribery needed than in USA.

 

medium giraffe's picture

I'm sure the US won't mind, what with their energy independence from highly efficient fracking and efficient tar sands efficiency.

 

 

Hahahahahahaha!

Zen Xenu's picture

U.S. "energy independence" is a pipe dream. The U.S. is an energy hog, and uses an amazing amount of energy per capita.

Fracing won't rescue the U.S. energy situation in the long term. The U.S. fracing insustry is mostly a ponzi scheme, using new credit to pay off old credit on a neverending hamster wheel of debt, where the principal never gets paid off.

medium giraffe's picture

Yeah, exactly.  EROEI - the numbers don't add up either.  I think tar sands is around 1.2 - 1.4 (though I'm sure the 'official' figure is higher).  There is almost no point whatsoever, especially sub $50.  The US auto industry is outrageously wasteful too - as you say, energy hog...  4L engines producing 200 bhp, 12mpg Hummers, honestly, wtf?  I think most Americans would be amazed to see a Euro or Jap domestic market car producing 300hp from a 2L engine or getting 40 mpg in a standard saloon.

Zen Xenu's picture

EROEI - the numbers don't add up either.

Agreed. The U.S. shale oil (actually in large is condensates and gas) revolution will slowly strangle itself in unpaid debt.

I've argued vociferously for the U.S. to pursue Arctic Oil, but U.S. environmental regulations (ignored by much of the world outside of the crazy EU) give default advantage to Russia.

BlindMonkey's picture

AMG 6.3 liters in the Mercs are a LOT of fun to drive. 

Diatom's picture

The best are the Black Series. Factory suspension settings are made for drifting...

D.r. Funk's picture

The confluence around protected-power is now, at least, circling tighter. (Awans, Comey, Wasserman, Mueller Russia, C foundation, Assange 650, Hrc, Mueller-Comey-Hrc) The breach into that timeline, would be inflection pt. Inflection. point. The geopolitical ancillary-escalations have a role, in, that, game as well (Nkorea, Anti petrodollar, Isis, Faux coldwar) The inflection point would most likely be The breaking point because Destabilization, is most likely their countermove, to takedown (or takedown vulnerability going hot) as the game-of-chicken described by some of us. many months. ago

goes live

wisehiney's picture

This is for Putin....

 

Women think I'm tasty, but they're always tryin' to waste me
And make me burn the candle right down,

 
But baby, baby, I don't need no jewels in my crown.
Cause all you women is low down gamblers,
Cheatin' like I don't know how,


But baby, baby, there's fever in the funk house now.


This low down bitchin' got my poor feet a itchin',


Don't you know you know the duece is still wild.


Baby, I can't stay, you got to roll me


And call me the tumblin' dice.


Always in a hurry, I never stop to worry,
Don't you see the time flashin' by.


Honey, got no money,
I'm all sixes and sevens and nines.

J J Pettigrew's picture

Oil is becoming a poor investment...

You dont see Elon Musk drilling for oil......he drills for govt subsidies

Last of the Middle Class's picture

Tunnels to Mars! That's where the real money is at.

BanyakUang's picture

The picture brings back memories.  That is the mobile arctic caisson, Molikpaq, which along with the conical drilling unit, Kulluk, was built by Gulf Canada Resources to operate in the Canadian Beaufort Sea in the 1980's. Hundreds of millions spent, some decent discoveries, but economics and environmental issues may mean those reservoirs may not produce until "kingdom come". 

Twee Surgeon's picture

Russia has a very long Northern coast or is that just a trick of the eye ?  Oil is not dead bio-mass. https://en.wikipedia.org/wiki/Far_North_(Russia)

They be planting their anchors so none else can.

roddy6667's picture

America is a very expensive country to manufacture anything. When the price of electricity skyrockets, more jobs will leave.

Last of the Middle Class's picture

Oh no, another oil story. Expect full fledged onslaught between the Peak oil retards and the tin foil hat lefties at any minute. Grab your tiki torches!!

Zen Xenu's picture

Nope. Oil & gas articles are the primary reason I registered here. Although I wonder why the Tylers focus so much on Oilprice.com articles. Not to knock Nick Cunningham, who generally writes decent opinions.

On this forum, I can be anon, which can be a relief. I do tire sometimes of "being responsible".

 

Swamp Yankee's picture

So THAT is where Boris went!

ThinkAgain's picture

 

  • the abundance of hydrocarbons on Titan undermines the common excepted fossil energy origin theory severely (link)
  • the a/semi biotic carbohydro origin theory (replacement of the fermented mammoths fossil hydrocarbon origin theory)
  • hydrocarbons are not biology reworked by geology, but geology reworked by biology (Nikolai Kudryavtsev / Thomas Gold)
  • hydrocarbons could be delivered as billion of years of cosmic dust from massive/unstable sources like the van Oort cloud
  • the elements in hydrocarbons (H+C) could be manufactured by nuclear processes in earth's core / mantle
  • hydrocarbons could be manufactured of elementary H+C by chemical/biological processes in earth's core/mantle
  • archaea (the third branch of the phylogenetic tree) can produce hydrocarbons also in very hot/deep environments
  • deep/heat biology has been proven in/around deep ocean volcanoes research (which moved scientific bounders further)
  • deep elementary water has been proven by all deep drilling exploration like the Kola Superdeep Borehole (link)
  • just like the spin of the earth powers ocean currents, hydrocarbons are centrifugial forced towards earth's surface
  • no change to the peakenergy theory by the deep oil theory (which just helps to find new/expensive oil/coal/resources)
  • exploring carbo hydros could contribute to the prevention of atmospheric carbon injections and their destruction (link)
  •  

    tostaky06's picture

    let me guess, USA will be back with carbon tax, and climat eco ? 

    Zen Xenu's picture

    One of the big differences between Russia and the U.S. is one country uses economic and military sledgehammers against the rest of the world, and one is a bit more pragmatic in dealing with dissent.

    I leave it to readers to figure out which is which.

    Off topic, I'll be over here, dodging brickbats.

    Arrest Hillary's picture

    "Socialism isn't theft .... it's just a redistribution of unearned wealth !" Jacque Strapp

    Zen Xenu's picture

    Heh heh, socialism is the opposite of wealth.

    Arrest Hillary's picture

    "Go easy on the Siberian Arctic regions, Vlad .... oil starved China, Japan and Korea have legitimate claims to that stolen territory ?" Lattitude with Attitude Comission

    HenryHall's picture

    >> It’s not clear who will need Russian Arctic oil in 2050,

    Anyone who wants to fuel aircraft or generate electricity to recharge electric road vehicles.

     

    As to sanctions, Russia is most impacted by inferior drilling and high power turbine technology of indigenous Russian design and manufacture. These are problems that Russian engineers can overcome in a year or two.

    roadhazard's picture

    "peak oil", bitches.

    MEFOBILLS's picture

    Russian scientists during Soviet years, determined that oil was created 10 miles down inside the earth, and hence is not dinosaur carbon.  The carbon comes from somewhere else (who knows) and comes from deep in the earth and pushes outward toward the surface due to pressure.

    Oil finds fissures in the earth and then gets trapped under dome like structures in crust.  Then humans come along and stick a straw in the dome, and the oil comes out under its own pressure sometimes.

    Monopoly forces, for example like Standard oil, made prices high and pushed the narrative that oil was scarce.  Cartels like Opec are the same strategy.

    Even if scare mongers are correct about oil decline, there is nuclear power.  Lots of uranium for now, and a never ending supply of Thorium.  The first Thorium reactor invented at Oak Ridge ORNL, ran with salts as coolant, put the Thorium into liquid form, and had a pseudo bladder to extract tritium and unwanted elements.  (The bladder is the big problem they didn't quite crack.  That and the metal piping improvements needed to stand up to the salts.)  ORNL ran this thorium reactor for four years.

    The real problem is private money power being concentrated into Oligarchies hands, and our friendly Oligarchs are in thrall to satanic ideology, like Kabbala and Talmud, or Hermetic Masonary.  Hermes or Hermeticism is the root stock ideology for all of the secret societies and control methods.

    Their control methods are to enable chaos.