Our Arctic Neighbors: Russia needs to step up exploration

Russia needs to establish a state company dedicated to exploring for offshore oil and gas resources, Anatoly Ledovskikh, the head of the Federal Agency of Subsoil Resources, Rosnedra, said at a national geologists’ conference in October. So far the agency has brought 8 percent of Russia’s potential offshore resources into the reserves category, according to Ledovskikh. Exploration is taking place very slowly and in some regions not at all, he told the conference.

Since 2005 more and more licenses have been given to companies, but “unfortunately, the expected adequate growth in geological exploration work is not being observed yet,” Ledovskikh said. “We need to create a single state corporation that is capable of fulfilling a large part of the volume of work by order of the state for geological study of the subsoil resources,” he added. Such a state company should focus on the Arctic and the Russian Far East, Ledovskikh said.

Russia’s Ministry of Natural Resources and Environment has been working on a project to create a state exploration company, but at the same time the head of the ministry, Yuri Trutnev, has said that the pace of geological exploration should be increased based on “creating market conditions to establish service companies.”

Russian independent oil major Lukoil has expressed interest in taking part in offshore exploration as part of a group led by a state-owned company. Lukoil would be prepared to increase investment in exploration in that situation, the company’s CEO, Vagit Alekperov, said in October. The state has hindered spending on offshore exploration due to the laws it has introduced on natural resources investment, Alekperov added.

The Russian government has favored state-owned Gazprom and Rosneft when awarding licenses and recently suggested that all offshore resources should be divided between those two companies.

—Sarah Hurst