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. Last Updated: 07/27/2016

State Firms Asked to Send Offshore Plans

The government has asked Gazprom and Rosneft to submit their plans for offshore oil and gas projects as it prepares to restart handing out production licenses for such projects after a four-year hiatus, a spokesman said Wednesday.

The two state-controlled companies are the only entities that can take on offshore projects in Russia under legislation enforced earlier this month, and the Natural Resources Ministry wants them to voice their interests, ministry spokesman Nikolai Gudkov said.

The ministry asked for the companies' plans in a letter sent last week, giving them a month to respond, he said.

A Gazprom spokeswoman declined to comment. A spokesman for Rosneft said he had no information about the letter.

"We are developing a strategy for the exploration and development of the continental shelf, and we need to understand the companies' interests," Gudkov said.

In what could spur the companies' interest in offshore fields, the new legislation enabled the ministry to hand out production rights for the fields, Gudkov said.

Because of a gap in the law, over the last four years the ministry was only able to issue licenses for exploration, not production, at offshore fields, he said.

A senior engineer at Gazprom, Vladimir Vovk, complained at an oil and gas conference Tuesday that the company had received no new licenses in the past five years.

That hiatus appeared to end earlier this month after the government granted the company nine licenses for northern areas that included the Kara Sea and the Sea of Okhotsk.

As well as the already-producing Sakhalin-2 project, which Gazprom is developing with Shell and two Japanese partners, the Russian gas giant's key prospective offshore project is the huge Shtokman gas field in the Barents Sea, which it is going to develop in cooperation with France's Total and Norway's StatoilHydro.

Only 20 percent of the Shtokman area has been explored, Vovk said.

Vovk said Gazprom was exploring the Arctic Ob-Taz Bay, aiming to make the Kara Sea, covered with ice for 10 months every year, its next offshore priority.

Its other offshore projects lie off Kamchatka Peninsula, while the Arctic Pechora Sea holds mostly oil reserves, he said.

Rosneft's head of prospective offshore projects, Alexander Svistelnikov, said at the same conference that Rosneft was hoping to get hold of oil fields in the Arctic. Speaking on the sidelines of the event, he named the Barents and Kara Seas as possible areas of interest.

Gazprom and Rosneft may not have to bid for offshore fields, said Konstantin Reznikov, an analyst at Dresdner Kleinwort. "The ministry needs to understand their plans before it issues the licenses," he said.