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Russian private oil companies are fighting for the continental shelf

April 13, 2012, 12:38 UTC+3

Some 16.7 million tonnes of oil are produced annually on the continental shelf

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The chief executives of four largest private oil companies complained to Vladimir Putin on the discrimination in favour of Rosneft and Gazprom, the Vedomosti daily writes. The prime minister agreed that it is possible to permit not only state-run companies, but also other “purely Russian companies” to develop the continental shelf.

Lukoil President Vagit Alekperov, Surgutneftegas Director General Vladimir Bogdanov, Bashneft President Alexander Korsik and TNK-BP Executive Director German Khan signed a letter on this issue to Vladimir Putin before a meeting chaired by the prime minister over the development of the continental shelf.

Since 2008 under the law on natural resources the companies under control of the state authorities that have at least five years of experience of the operation on the continental shelf can bid for licenses for offshore deposits. Only two companies Rosneft and Gazprom meet these criteria. Until recently only Alekperov opposed such inequality in the industry. He stated in his recent interview with the Financial Times newspaper that the state-owned companies acquire licenses, but do not use them after that. His colleagues from three largest Russian private oil companies sided with Alekperov.

Some 16.7 million tonnes of oil are produced annually on the continental shelf (three percent of overall oil production in Russia) and 41.6 billion cubic meters of gas (about six percent of gas production in Russia) are extracted on the offshore shelf, the newspaper cited an analyst of Troika Dialog Valery Nesterov as saying. The Russian state program envisages a higher oil production to 40-80 million tonnes and a higher gas production to 190 billion cubic meters by 2030. According to the Ministry of Natural Resources, the reserves on the Russian continental shelf are estimated at 100 billion tonnes in oil equivalent that is 20-25% of all world oil and gas reserves.

Legislative restrictions “deprive most Russian companies of the interest to active geological prospecting,” the chief executives warned. They asked Putin “to consider a broader makeup of users for the natural resources of the continental shelf” from Russian private companies.

Putin’s press secretary Dmitry Peskov told the Vedomosti daily that Putin did not see a letter of the oil tycoons, but he is already aware of it from the media. However, at the Thursday meeting the prime minister offered to develop the conditions, which will make it possible for “purely Russian companies” to operate on the continental shelf. “I already asked the government to ponder over how to invite purely Russian companies to engage in these projects and use their capacities. Certainly our domestic companies should operate on specific terms,” he recalled, making a remark that these companies should not only “trade in their right for operation”, but also attract necessary financial resources.


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