Arab Today, arab today offers shelf deal to russian oil firms
Last Updated : GMT 09:42:59
Arab Today, arab today
Arab Today, arab today

Offers shelf deal to Russian oil firms

Arab Today, arab today

Arab Today, arab today Offers shelf deal to Russian oil firms

Moscow - Ria Novosti

Russia\'s largest oil company, Rosneft has presented proposals to four of the country’s largest private oil firms to develop hydrocarbon deposits on Russia\'s Arctic shelf, but they are unlikely to be happy with its offer, analysts said on Wednesday. Rosneft made an offer on the joint development of 12 fields on the Arctic shelf to LUKoil, Bashneft, Surgutneftegas and TNK-BP on Monday, Kommersant business daily reported on Wednesday quoting sources close to the companies. Rosneft proposes the energy companies should bear the expenses of geological prospecting and pay the oil major $0.25 per barrel of oil produced from offshore deposits. The \"Rosneft proposal is a formality,\" a source in one of the firms which received the offer said. The fields in question are located near Norway\'s maritime shelf and also in Russia\'s Far East. Under the terms from Rosneft, the private oil firms would also have no operational control of the deposits and no opportunity to sell oil themselves. \"The terms of work on the shelf should be discussed and worked out for each project individually. The current offer is unlikely to be a profitable deal,\" the company source told Kommersant. Under existing rules, only companies with over 50 percent state ownership and no less than five years\' experience working in marine exploration are allowed to develop the Russian continental shelf. Only Rosneft and gas giant Gazprom currently meet these requirements. Analysts polled by RIA Novosti said the terms offered by Rosneft were not lucrative for domestic private energy firms, despite giving them an opportunity to gain access to the large hydrocarbon reserves in the Russian Arctic. \"Rosneft is... the strong party in the deal, as it holds licenses to develop fields, so the terms offered are unlikely to be equal. [Rosneft wants] to reduce its risks concerning offshore hydrocarbon production and shift them on to the firms which would hold minor stakes in the projects,\" Investcafe analyst Grigoriy Birg said. “I think the offer is a kind of implementation of a formal instruction [by the Russian government] to provide access to the shelf projects to all oil companies,\" said VTB Capital analyst Alexander Kirevnin. \"This offer is not attractive the way it was formulated, as the projects are highly risky and need a lot of investment,” he added. Birg said the private oil firms would be likely to accept the adverse terms for working on the shelf due to the potentially rich hydrocarbon reserves, without which they would be potentially left without high earnings. The Russian government decided last week not to levy export duties on new hydrocarbon development projects on the Russian shelf. Other duties and taxes will also be low or fixed for 15 years from the production starting date.

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