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Shelf Crisis
30 Apr 2009 03:28 PM
Excerpt from Russian Petroleum Investor by Elena Kirillova 
| There should be a postponement of shelf projects until economic times are better, according to Russian deputy prime minister Igor Sechin. “In the near future, the shelf will not have major promise because it requres serious capital investments and will not pay off quickly given the current situation in the market.” he said. In today’s conditions of global financial crisis, nobody can any longer afford such volume of investments -- not the government, state companies or private traders. |
According to the Ministry of Natural Resources and Ecology, the Russian continental shelf accounted for an essential part of initial total hydrocarbon resources: one-third of gas, more than 22 percent of gas condensate and 12 percent of crude oil. The seas of the Arctic continental shelf contain the primary share (more than 80 percent) of all hydrocarbons on the entire Russian shelf. The investment volume necessary to develop the shelf until 2050 totals R61 trillion ($1.84 trillion at current exchange rates), Rosneft president Sergey Bogdanchikov declared in 2008. Capital investments in geological exploration are estimated in R15.9 trillion, development of shelf deposits at R45 trillion. Only large companies with the support of the state can afford such investments.
Until recently, major operators considered the shelf a rather promising place for investments -- Russian oil and gas companies were trying to convince the government to transfer the license for one or another shelf deposit. In the summer of 2008, legislation passed protecting shelf development from participation by non-resident companies. The law allows the granting of blocks on the continental shelf without conducting competitions or auctions. Gazprom has asked for the state to give it the development rights of several large strategic shelf gas deposits - and has received such rights without competition. All shelf blocks are of federal strategic value and, therefore, cannot have foreign ownership without explicit permission from the government. Read Related Articles
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