Large-scale Arctic oil and gas production is not expected in the next decade

22 may 2017

"Major oil and gas production on the Arctic shelf is not expected before 2030", said the Analytical Center expert Alexander Amiragyan, speaking at the XIV International Conference on the Russian and CIS Shelf Development – 2017. The reason is the lack of major projects and investments.

The expert mentioned global oil prices and sanctions against the Russian oil and gas industry as factors limiting the development of resources on the Arctic shelf. Among incentives he named the benefits for mineral resources extraction tax and export customs duties. The development of the Northern Sea Route may be another significant incentive for the development of Arctic projects.

According to Mr. Amiragyan, there is some global uncertainty regarding growth in demand for oil and gas. That is due to the slowdown in the global economy, low oil and gas prices and their high volatility, increased competition in the global gas market and the growing role of renewable energy.

The expert stressed that the development of resources of the Arctic shelf has a long-term nature and is intended to become an important part of ensuring the country's energy security.

The analysis of licensed areas on the Arctic shelf shows that the best conditions for development are available in littoral areas of the Barents and Kara seas, which is explained by the high level of the development of transport infrastructure and better climatic and ice conditions, as well as the fact that these areas have been sufficiently studied, the analyst said and presented a study on the assessment of oil and gas exploration on continental shelves. According to the study, low oil prices, environmental restrictions and competition with hard to recover reserves adversely affect the prospects for the development of licensed areas,  while state support, expressed through taxes and participation in the development of infrastructure, has positive effect.

The major constraints for shelf works are technological dependency and the lack of necessary funds, according to Mr. Amiragyan.

Photo: from open sources