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Russia Effectively Doubles Nations Oil Reserves

Commodities / Crude Oil Oct 03, 2011 - 01:23 PM GMT

By: OilPrice_Com

Commodities

Russia, currently vying for the title of world's top oil producer with Saudi Arabia, claimed that new findings in its offshore Arctic territories have effectively doubled the nation's energy reserves.


According to numerous Russian media reports, addressing a meeting of the sixth media forum of the United Russia Party on 25 September, Russian Natural Resources Minister Iury Trutnev said that the preliminary forecast is that resources in the Russian Arctic shelf are comparable to those in mainland Russia, adding, "Speaking of long-term planning, these reserves could last 100, may be 150 years, but longer is unlikely. Humanity will eventually have to look for new energy anyway. Recently, we completed 40-year talks with Norway, delineated the gray zone, and now obtained another 5 billion tons of fuel equivalent there."

Trutnev's new Arctic reserve claims are buttressed by the United States Geological Survey (USGS) 2008 survey, which estimated that 90 billion barrels of undiscovered oil and 1.668 trillion cubic feet of undiscovered natural gas lie beneath the Arctic's waters and ice, representing 13 percent of the world's undiscovered oil. Strong oil prices, more advanced offshore equipment and receding sea ice are leading to a growing interest in the Arctic.

Four years ago Russia's Arktika 2007 expedition took a team of Russian geologists on a six-week voyage aboard the 50 Let Pobedy ("50 Years of Victory") nuclear icebreaker to the underwater Lomonosov ridge in Russia's eastern Arctic Ocean, which they claimed was linked to Russian Federation territory and contained 10 billion tons of natural gas and oil deposits. The Russian Federation has been busily advancing its claims over its Arctic continental shelf ever since. Just to be on the safe side, Russia has prepared a justification for submitting in 2013 a new claim for the expansion of the borders of its Arctic shelf, according to Trutnev, who told media forum participants, "Important work was carried out this year: our vessels covered a distance of 22,000 kilometers and conducted activities to justify Russia's new claim in 2013."

Russian Prime Minister Vladimir Putin has also gotten into the act of national chest-thumping about Russia's new-found Arctic riches. According to information posted on the Prime Minister's website, Putin told participants at the second International Arctic Forum, "The Arctic - Territory of Dialogue" in Arkhangelsk on 22 September, "We have already installed one of the world's largest hydrocarbon platforms there. Russia is starting to develop the Arctic shelf and opening a new chapter in the history of Arctic exploration. Very soon it will contain pages on the commissioning of the Shtokman deposit in the Barents Sea and the development of resources in the Kara Sea and on the Yamal Peninsula."

Seeking to allay the not inconsiderable environmental concerns about the Arctic's fragile ecosystems Putin added, "All our plans will be carried out in compliance with the toughest environmental standards. A careful, civilized attitude to nature is a requirement of all development programs. Active economic development of the Arctic will be beneficial only if we maintain a rational balance between economic interests and environmental protection for the long term, not just for 10, 15 or 20 years. I mentioned the Prirazlomnoe deposit, where oil production is expected to last for at least 25 years and, hence, environmental support must be provided for this entire period. The Shtokman deposit is expected to last for 50 years."

Just coincidently, during the Forum Putin fielded a telephone call from Rosneft president Eduard Khudainatov, who just happened to be standing on its Prirazlomnoe offshore platform in the Pechora Sea. Via sat-phone hookup Khudainatov addressed environmental safety concerns by telling Putin, "We know absolutely how to do this. We have started this work and we are absolutely certain that the risk in Arctic shelf exploration will be ruled out."

Whether of not the Russians have either the expertise or the necessary cash to exploit the region's reserves is another matter, as Arctic oil and natural gas exploration is more technically and physically challenging than for any other environment. However, Putin added that Rosneft has a long strategic cooperation agreement with ExxonMobil, and no doubt there will be other international energy companies willing to brave Russia's tortuous bureaucratic maze for a piece of the action.

In the early 2012 Russia plans to start the first commercial offshore oil drilling in the Arctic on its Prirazlomnoe offshore platform, hailed in the Russian media as the world's first Arctic-class ice-resistant oil rig.

Oh, and if things do screw up in spite of Khudainatov's promises, well, according to Russian Transport Minister Igor Levitin, addressing the same forum as Putin, the Russian government has allocated 20 billion rubles ($623 million) to construct three new nuclear and three diesel-electric icebreakers.

Source: http://oilprice.com/Energy/Energy-...

This article was written by Dr. John CK Daly for Oilprice.com who offer detailed analysis on Crude Oil, Geopolitics, Gold and most other commodities. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

© 2011 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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