Russia and the North by Elana Wilson Rowe

Author:Elana Wilson Rowe [Wilson Rowe, Elana]
Language: eng
Format: epub
Tags: International Relations, Political Science
ISBN: 9780776618401
Publisher: University of Ottawa Press
Published: 2009-07-18T05:00:00+00:00

The Russian Offshore Strategy

Russia has a continental shelf of 6.2 million km2, of which four million are considered to be of potential interest for oil and gas production (Strategiya 2006). According to Russia’s Ministry of Natural Resources, one-third of Russia’s initial gas resources and twelve percent of its oil resources are located on the continental shelf (Varlamov 2007). This corresponds to 13.5 billion tons of oil and seventy-three trillion m3 of natural gas. Of this, two-thirds are said to be located in the Barents and Kara seas (Strategiya 2006). The ministry has, on different occasions, published very optimistic statements about future output, such as that the shelf could produce ninety-five million tons of oil and 320 BCM of natural gas by 2020 (see Trutnev 2005). Offshore production today is only around five million tons of oil, exclusively from Sakhalin.

While offshore resources are often presented as an important element in Russia’s future energy balance, efforts to develop a comprehensive offshore strategy began relatively late. Throughout the 1990s, Russia did not really have a plan for development of offshore resources and very little attention was devoted to offshore exploration. In the words of Natural Resources Minister Yury Trutnev: “Since 1993, no serious exploration of the RF [Russian Federation] continental shelf has in fact been undertaken. The amount of exploration operations was reduced to a tenth compared with the mid-1980s when most of the known fields were discovered” (Trutnev 2006).

The closest we come to an offshore strategy from this period are the plans developed by Gazprom, which were endorsed on the political level but remained unimplemented (see, for example, Moe and Jørgensen 2000). Offshore resources were considered a long-term option, and Gazprom gave little priority to such development after the company had secured control over promising fields in the Barents Sea. Gazprom’s interests changed, however, a few years ago with liquefied natural gas (LNG) becoming an increasingly interesting business prospect (among other motivating factors discussed below). Meanwhile, the government has also taken steps to work out a strategy for offshore development (Naumov 2007).

The government started a process in October 2003 and the Ministry of Natural Resources worked out a “strategy for exploration and development of the oil and gas potential of the continental shelf of the Russian Federation until 2020” that was presented at a meeting of the Russian government in March 2006 but has yet to be adopted officially (Strategiya 2006). Nevertheless, the Ministry of Natural Resources and affiliated structures, as well as other actors, continue to refer to this document as the offshore strategy and its main points are therefore worth reviewing. Overall, the strategy points out the vast potential of the offshore fields and argues for the realization of ambitious production goals—ninety-five million tons of oil and 150 BCM of natural gas offshore by 2020. However, the strategy also points out the obstacles to the realization of those goals. These obstacles include

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