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Russia looks to step up arctic offshore drilling to reclaimoil-production throne by 123wert sdfsf
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Russia looks to step up arctic offshore drilling to reclaimoil-production throne by 123WERT SDFSF
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| Article Posted: 02/19/2013 |
| Article Views: 116 |
| Articles Written: 2217 - MORE ARTICLES FROM THIS AUTHOR |
| Word Count: 649 |
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Russia looks to step up arctic offshore drilling to reclaimoil-production throne |
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Business,Business News,Business Opportunities
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According to data from the Joint Organization Data Initiative,Saudi Arabia has surpassed Russia as the world s largest oilproducer, a position which the latter country held for six years. The Middle Eastern kingdom s oil production rose to a 31-year highlast year, while Russia s dropped. As Matthew Hulbert writes inhis analysis for Forbes, If we wanted any further evidence why the Arctic really matters for Russia, we just got it. Declining production inWestern Siberia can only be replaced by drilling for offshore oil,in Russia s Arctic.
Whereas Saudi Arabia has spare capacity,allowing it to ramp up production, Russia is already producing tothe fullest extent possible. A drop in production is a scary thing to contemplate for PresidentVladimir Putin, who began his third presidential term earlier thismonth. He has succeeded in large part by placating the middle classwith economic growth and stability. Since oil and gas composetwo-thirds of Russia s exports, both the price of oil and volumeof oil the country exports are crucial to maintaining his power.The price of oil has held steady lately at over $100 per barrel.
But what has changed in recent years are two things. First, Putinkeeps promising more and more, requiring a higher cost per barrelof oil to make ends meet. With increases to pensions and a 33percent hike in the defense budget, the Economist reports that the country will need oil to sit at $130 a barrel tobalance its budget, which is funded about 60 percent by oil and gastaxes. Second, the discovery of new sources of oil has slowed down,and offshore oil production will not begin in earnest until 2020.
The Kremlin reports that Russian oil production has has remainednear the highs reached after the fall of the USSR, but latestfigures show that not only has production slowed, it has actuallydecreased. As you can see from the chart above, the difference between Saudiand Russian oil production is minimal. However, the recent drop in Russian oil production is quite large,at 5 percent between December 2011 and January 2012 -- a decline of500,000 barrels, which Mark Adomanis of Forbes says is the equivalent of the total production of acountry like Argentina or Ecuador disappearing overnight. He questions whether the datais accurate, since there were no reports of problems within theRussian oil industry that would cause such a dramatic drop. Regardless of whether production has fallen off that much and thatquickly, Putin knows that new sources of oil need to be exploited.He has announced that exports from new offshore fields will enjoybusiness-friendly tax rules for at least the next 15 years, and heis even considering allowing private companies to receive licensesto drill.
This would be a big change for a country in which the oiland gas industries are controlled by state-owned companies Rosneftand Gazprom. The new tax rules, which will tax exports less the more difficultthe oil is to extract, are designed to foster $500 million ininvestment in offshore oil. Production will be ranked according tofour different categories, with the most challenging areas beingthe Laptev Sea, East Siberia, Bering Sea, the northern part of theKara Sea, and the Sea of Okhotsk, and the second most difficultareas in parts of the Arctic such as the Barents Sea, Pechora, andthe southern part of the Kara and Okhotsk seas, including thecontinental shelf of Sakhalin. In recent weeks, Rosneft has announced that it will team with Exxon Mobil in the Kara Sea and the Italian oil company Eni in the BarentsSea. Tax breaks will also probably encourage Statoil and Total toresuscitate the Shtokman natural gas project, in which they havestakes.
It had been put on hold due to uncertainty with regard totax regulations. I am an expert from Apparel, usually analyzes all kind of industries situation, such as men cardigan sweaters , tractor and machinery.
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