Oil reserves at Russian seas to bring $5 billion to the budget

Sea shelf developments can save the Russian oil industry

Russia may run out of its profitable resources of hydrocarbon raw materials by 2015. Oil and gas resources will be left on sea shelves only. Yury Trutnev, the Russian Minister for Natural Resources, believes that the nation's oil and gas companies need to start developing oil and gas deposits as soon as possible. The Minister for Economic Development and Trade, Gherman Gref, objected the idea of establishing a special state-owned company for the development of sea shelves.

Minister Trutnev believes that it will be possible for Russia to avoid a sudden reduction of oil extraction after the year 2010 only with the help of sea shelf developments. About 75 percent of Russia's ground oil fields are being currently developed. Furthermore, they are almost 50 percent exhausted.

The Russian Ministry for Natural Resources is expected to put up the territory of 240,000 km2 of sea shelf for auction for geological exploration before 2010. Total reserves of the territory are estimated at nine billion tons of fuel. The fields could bring the profit of $5 billion for the Russian budget. It is noteworthy that 131 oil and gas licenses have brought not more than $10 billion to the state from 1991 to 2003.

According to Trutnev, the development of Russian shelves will depend on the level of world prices on oil, whereas world prices will also depend on Russia's extraction at sea shelves as well. Russia needs to struggle for world markets. The struggle, however, is impossible without the development of new oil and gas fields.

The predicted extraction of oil on the continental shelf by 2020 will make up 95 million tons of oil and 320 billion cubic meters of gas. The annual extraction of oil is to make up 10 million tons by 2010; the gas extraction is expected to reach the level of 30 billion cubic meters. To crown it all, the volume of attracted investments is expected to reach $70-110 billion.

Minister Trutnev said that the geological exploration of the Russian continental shelf started in 1993. Russian companies, however, lack 20 years behind foreign enterprises from the technological point of view. The minister believes that Russia should therefore attract experienced foreign companies possessing unique equipment for the development of oil and gas fields at sea. The Ministry for Nature added, though, that one should make a list of strategic developments, at which the participation of foreign investors will be restricted. In addition, the ministry suggested the establishment of the state national committee, which would guarantee the market control of the state over the developed oil fields. Such companies currently run their activities in Norway, Indonesia, China, Vietnam and Syria.

Gherman Gref, the Minister for Economic Development and Trade, said that he was against the creation of a state-owned super-company that would be given the absolute power. According to Gref, one should create transparent, competitive methods for the attraction of private investors for the development of oil and gas deposits. The Ministry for Nature and the Ministry for Economic Development and Trade will have to coordinate these issues during the forthcoming six months.