25 May 2010 16:55

Rosneft, Zarubezhneft applying for offshore licenses

MOSCOW. May 25 (Interfax) - Russian oil companies appear to be stepping up their interest in offshore licenses to some extent, although the cost-intensive nature of prospecting these properties is still dampening their enthusiasm, a Natural Resources Ministry source told Interfax.

The source said three state-owned companies had applied to the Russian Federal Subsurface Resources Agency (Rosnedra) since April. "Rosnedra has started to prepare licenses, but shelf properties are federal in importance, so it is up to the government to decide," the source said.

Rosneft has applied for licenses to the three Prinovozemelnye sections in the Kara Sea, close to the Novaya Zemlya archipelago. It has also applied for the rights to the Admiralteisky and Pakhtusovsky sections in the Barents Sea that used to be developed by Sintezneftegaz.

Geophysical studies have already been carried out at these sections, where the prevailing resource is thought to be gas.

Rosneft has also expressed an interest in the Yuzhno-Russky section in the Pechora Sea, thought to contain mainly oil of the highly sulfurous variety "and therefore difficult to describe as appealing," the source said.

In addition, Rosneft has applied for a license to the Yuzhno-Chernomorsky section in the Black Sea, which is adjacent to the company's existing Tuapsinsky Progib and Val Shatsky sections.

The source also said Zarubezhneft might gain access to offshore fields once it has merged with the state unitary enterprise Arktikmorneftegazrazvedka. It has already applied for the rights to the Madachagsky section in the Pechora Sea, but this has a common boundary with the Yuzhno-Russky section that Rosneft is aiming for so problems may arise.

Zarubezhneft has also applied for Tyulenii section in the Caspian Sea, which used to be licensed to LLC Megatron NVK, which was owned by Germany's Wintershall AG. The source said the exploration license to this, the last available section in the Russian sector of the Caspian Sea, expired in December last year and was returned to the state geology fund.

Gazprom has so far expressed an interest in one section, Kharasaveisky-morye, in the Kara Sea.

The source said the companies, particularly Gazprom and Rosneft, were reluctant to commit themselves to offshore projects. "Rosnedra is willing to issue the licenses, but the companies are not keen to apply because they don't have the money needed to develop the shelf right now," the source said.

"It costs $100 million-$120 million to drill one well on the shelf, but they need more than one well, and then there is the seismic surveying on top of that. It can end up costing at least half a billion to explore just one section," the source said.

The license applications might have been triggered by a series of conferences on offshore development that ministries and government officials held early in the spring. The licenses might be issued as early as the fall if the government approves than and Rosnedra can agree the terms with the other agencies, above all the Energy Ministry, quickly.

Rosneft has said in the past that it is interested in the Admiralteisky, Pakhtusovsky and Yuzhno-Russky sections, but it has not gone as far as actually applying for them.

The press offices of Gazprom and Zarubezhneft did not comment on the information.