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Rosneft president Igor Sechin. projects in Greenland, in favor of the ? are, although this is not really compa- is scheduled to begin this year using the

Russia

Left image: Rosneft; right image: Gazprom.

Russian Arctic, due to cost issues. rable with liquidation of oil spills in ice West Alpha semisumbersible drilling rig.

ExxonMobil decided not to partici- conditions. According to the partners’ plans, drill- development of the shelf. pate in a bid round of 50,000sq km of An of? cial representative of WWF, ing the Universitetskaya structure may

If the latest claims of Rosneft and its Greenland shelf area, where reserves are comments: lead to the discovery of a new petroleum foreign partners to be met, this will be a estimated at 31MMboe. “There is no doubt that requirements province on the Arctic shelf, with poten- second major success of the shelf’s opera- Instead, the US company, together with for operations on the Russian Arctic shelf tial reserves of more than 35 billion boe. tors for the last several months and will Rosneft, plans to focus on developing should be tightened…due to high threat According to Igor Sechin, Exxon has make the Russian shelf one of the worlds the North-Kara, North Wrangel-1, and of ? oods and especially in the protected already promised to fabricate most of the most favorable and liberal, in terms of East Prinovozemelsky-1 oil-prone areas. areas. Russian environmental regulation equipment needed at local production taxation and ecology. These are spread across nearly half a currently remains one of the world’s most facilities and shipyards.

The latter will be also mainly due million hectares of three protected areas: liberal in this ? eld, which attracts foreign Yuri Shafranik, chairman of the Union to the recent adoption of the federal Great Arctic, Wrangel Island, and Russian investors.” of Oil and Gas Producers of Russia said law, On tax and customs tariff stimula- Arctic, which has brought criticism from In the meantime, Rosneft said that the that cooperation with foreign partners is tion of production of hydrocarbons on many ecology organizations. company and its partners use the latest very important for the Russian fuel and

Russia’s continental shelf, approved by If the ? rst projects are successful, and the most modern technologies in oil energy complex, as local companies cur- the Russian Parliament late last year and Exxon has not ruled out the possibility of and gas production. They say that deal- rently experience a lack of technologies which divided all of Russia’s offshore expanding cooperation with Rosneft in ing with a possible oil spill is an integral to develop the Russian Arctic shelf. projects into four categories based on the the Arctic region, taking into account that part of the company’s corporate program level of complexity. at present Rosneft owns 46 licenses for for environmental and industrial safety Eugene Gerden is an

Unlike to other offshore projects, exploration and production of hydrocar- work on the Arctic shelf. international writer where mineral extraction tax is set at bons in the Russian Arctic shelf, with Analysts of the Russian Oil Union based in St. 30% of the cost of raw materials, in the total reserves of 34.6 billion tons of oil believe that global majors’ interest in the Petersburg, Russia. case of the Arctic projects, this rate is set equivalent. national Arctic shelf will continue to Since 1999, he has at the record low ? gure of 5%. In addition to Exxon, other major IOCs, grow, due mainly to recently tightened written for

In addition, all operators of Arctic such as Statoil and Shell, apparently legislation for offshore oil production in Downstream Today, offshore projects will receive a guarantee prefer Russian projects to similar projects the US and other countries. Oil and Gas of permanency of the tax regime for up to in Alaska and Norway. They also believe that, thanks to big International, Chemistry World, and 15 years, and will be exempted from pay- But constant concessions to oil majors political in? uence of its top management, other oil and gas industry publications; ment of export duties, as well as import from the national government has Rosneft will be able to lobby its latest he is also a correspondent for duties and VAT on imported technical sparked protests from many Russian and claims announced by Sechin. WardsAuto, Aviation Pros, and Shepherd equipment. The law also exempts opera- global environmental organizations, as The investments of the consortium of Media. Gerden can be reached at tors from property and transport tax. well as some Russian of? cials. Rosneft, ExxonMobil, Eni and Statoil in [email protected].

In return, the companies have pro- According to a representative of the exploration work on the shelf is estimated vided guarantees for the start of produc- World Wildlife Fund (WWF), Rosneft at $14 billion, while the total investments tion on the shelf beginning in 2016. plans to start developing the Arctic shelf in the ? rst phase of the shelf’s develop-

The Russian government explains without having any technologies to con- ment is $500 billion.

the decision for the provision of such tain and clean up oil spills. So far, Rosneft and ExxonMobil preferential tax regime to the companies WWF says that Rosneft is not even have identi? ed the ? rst structure is based on harsh climatic conditions of able to utilize associated gas produced to be drilled in the Kara Sea, the Arctic region, which is associated from traditional oil ? elds, and must known as Universitetskaya. Work with high production costs for them and require investments, estimated at a total of $700 billion.

The decision to provide bene? ts to the companies was taken despite the opposi- tion of Sergey Donskoy, Russia’s Minister of Natural Resources, who also proposed to introduce tax on additional income for the companies. The proposal, however, has not received any support from the

Russian government.

According to an of? cial representative of the Russian Presidential Administration, providing these bene? ts will create condi- tions to encourage more active participa- tion of foreign investors in the develop- ment of the Russian Arctic shelf.

This have not gone unnoticed by major partners of Rosneft in Russia, and in particular ExxonMobil, which recently announced plans to leave similar Arctic oedigital.com March 2014 | OE 65 000_OE0314_Russia_Arctic2.indd 65 2/21/14 1:12 PM