Three export terminals on Russia’s Arctic coast shipped an average of 230,000 barrels of crude in the second quarter of 2016.
This figure is almost equal to Libya’s total daily exports, according to Bloomberg calculations, and it is also a twofold increase from the initial 130,000 bpd handled by Lukoil’s Varandey, and Gazprom Neft’s Prirazlomnoye and Arctic Gate, Oil Price reported.
Plans for the future are ambitious. Arctic oil and gas exploration is a clear priority for the Kremlin. A few weeks ago, Russia’s Natural Resources Minister Sergey Donskoy wrote on his Facebook page that “the Arctic shelf, despite some project delays related to oil prices, remains a strategic direction for development.”
He added the government has introduced tax relief for companies involved in Arctic exploration and development as a way of stimulating these activities.
Earlier this month, Russian Deputy Prime Minister Dmitriy Rogozin announced the government is working on a comprehensive standard for Arctic exploration that will seek to establish the most appropriate technology and equipment to be used in the development of oil and gas deposits in the region.
Most of the country’s current crude oil output comes from giant fields across Siberia, which were discovered decades ago and are now depleting.
Russia is trailing the US and Europe in terms of technological advancements in the oil and gas industry, especially in shale, so it would need to rely overwhelmingly on imported equipment if it wants to explore its shale resources. Until these imports can be restarted, however, shale reserves could be difficult to tap.
There are three potentially giant fields in Russia’s Arctic that are currently being developed: the onshore Kharyaga, Trebs and Titov, and Prirazlomnoye.
Kharyaga was considered a very promising deposit initially, and companies such as Total and Statoil were quick to get on board. But the reserves of the field have now been revised down from 125 million tons to 29 million tons, and Total is out of the picture as operator, transferring this role to Russian Zarubezhneft. According to Bloomberg estimates, Kharyaga could yield 200,000 barrels per day in four years.
Prirazlomnoye is also estimated to hold over 70 million tons of crude in recoverable reserves and can yield 5.5 million tons annually. By 2020, Bloomberg estimates, the field's output can reach 125,000 bpd. The third field, which is actually twin fields Trebs and Titov, is expected to start producing 100,000 bpd by 2020.
