Min: Margin of Arctic oil, gas production low under current prices

MOSCOW, Oct 7 (PRIME) -- The margin of oil and gas production in the Russian part of the Arctic zone is too low under the current prices for hydrocarbons, Energy Minister Alexander Novak said on October 5 during the Russian Energy Week.

“The margin of the Arctic projects is not sufficient as of today. We noted that and we made a corresponding report to the Russian government that we need to simulate conditions to ensure intensive development of the Arctic, we need to create a taxation system that would make profitability of Arctic projects similar to the projects in Western Siberia or in other regions,” he said.

Drilling in the Arctic zone is very expensive, the cost of a single well ranges from U.S. $500 million to $1 billion. And if the drilling does not bear results, the company loses the money, so it is “a risky endeavor,” he said.

Oil companies Gazprom Neft and Rosneft are working in the Arctic, but not as intensively as they could. “At the same time, we see that the current contraction of prices for hydrocarbons makes the Arctic projects economically unattractive to a large degree,” he said.

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