The Arctic continental shelf is estimated to hold vast deposits of hydrocarbons and rare earth minerals. Russian and Norwegian exploration and production (E&P) operators have been expanding their operations in the Arctic region. Warming temperatures in the Barents Sea and northern coastline of Russia are giving an added impetus to resource development in this region, according to GlobalData, a data and analytics company.
The company’s latest thematic report, “Arctic Exploitation”, discusses how Russia is keen on hydrocarbon appraisal and development from the Arctic region to such a great extent that it even settled its longstanding territorial dispute with Norway. The government is also providing tax incentives to companies that invest in this region. State-owned oil and gas companies Gazprom and Rosneft are the top licensees for E&P activities in the Russian Arctic, while companies such as Novatek and Lukoil are also actively involved in the appraisal and development activities.
GlobalData’s thematic research identifies oil and gas companies, such as Gazprom, Rosneft, Novatek, Lukoil, BP, Equinor, ConocoPhillips and Aker BP as the top oil and gas producers in the Arctic region.
Ravindra Puranik, Oil & Gas Analyst at GlobalData, comments, “Gazprom and its subsidiary Gazprom Neft has been at the forefront in the development of hydrocarbon reserves and associated infrastructure in the Russian Arctic. Gazprom is the leading natural gas producer in the region. Gazprom Neft, which primarily produces liquid hydrocarbons, anticipates to produce around 50% of its hydrocarbons from the Arctic region in 2020.”
“Rosneft, through several subsidiaries, is working an ambitious project called Vostok Oil for the development of crude oil reserves in the Arctic region. The project aims to boost output from producing and discovered fields from the Vankor cluster and nearby oil fields. There is also a proposal to construct a shipping terminal in the Taymyr Peninsula and an oil pipeline to transport oil from the fields to this terminal. This project is likely to receive tax breaks from the Russian Government,” adds Puranik.
“Novatek has been emerging as a prominent player in the competitive landscape of the Arctic due to its key role in the production and export of natural gas from the Yamalo-Nenets Autonomous region. The company plans to strengthen its footprint in the region by bringing more fields on stream and setting up two or three new liquefied natural gas (LNG) liquefaction terminals along Russia’s northern coastline.”
In Norway, the Barents Sea could emerge as the potential hotspot for oil and gas projects in the Norwegian Continental Shelf.
Puranik concludes, “The oil and gas production landscape in the Norwegian Arctic is primarily dominated by the Equinor-operated Snøvhit gas field located in the Barents Sea. In the last few years, Equinor has been pushing for Arctic resource development amid depleting reserves in its legacy assets. The company has undertaken field development at the Johan Castberg oil field in the Barents Sea and is due to commence production by 2022. In 2020, Equinor intends to drill more wells in the western section of the Barents Sea for potential tiebacks with the Johan Castberg oil field.”