Offshore Arctic oil very challenged

With current low oil prices, companies developing or operating oil fields in the Arctic offshore are facing substantial losses, according to an Aug. 26 report in the Barents Observer. According to Vadim Yakovlev, deputy director of Russian oil and gas company Gazprom, the Prirazlomnoye field, the only operating offshore oil field in the Russian Arctic, requires an oil price of about $50 to $60 per barrel for profitability, the Barents Observer report said. The price of Brent crude closed at $48.88 on Sept. 8 according to the U.S. Energy Information Administration.

Yakovlev said that, despite the economic challenges, Gazprom plans to continue expanding oil production from Prirazlomnoye, with production expected to increase from 800,000 tons in 2015 to 1.8 million tons in 2017, according to the Barents Observer report. Gazprom also plans to continue with its development of the Novy Port oil field in Ob Bay, off the northern coast of Russia, the report says.

The report also says that offshore oil fields in the Norwegian Barents Sea require oil prices in the range of $67 to $90 per barrel for profitability.

- ALAN BAILEY