Oil and Gas Exploration Market in the Arctic: Estimated 22% of Global Undiscovered Oil and Gas Resource

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ReportsnReports.com adds “Oil and Gas Exploration in the Arctic - Vast, Technically Recoverable Oil and Gas Resources Attract International Oil Companies to Increase Presence in the Region” market research report that says the Arctic region holds estimated technically recoverable resources of 90 billion barrels (bbls) of oil, 1,669 trillion cubic feet (tcf) of natural gas, and 44 billion bbls of Natural Gas Liquids (NGLs).

There are plans to submit a proposal to the Russian government in late 2012, focusing on the abolishment of export duties for a period of between five and fifteen years, depending on the viability of the project.

ReportsnReports.com adds “Oil and Gas Exploration in the Arctic - Vast, Technically Recoverable Oil and Gas Resources Attract International Oil Companies to Increase Presence in the Region” market research report that says the Arctic region holds estimated technically recoverable resources of 90 billion barrels (bbls) of oil, 1,669 trillion cubic feet (tcf) of natural gas, and 44 billion bbls of Natural Gas Liquids (NGLs).

According to the World Petroleum Resource Project undertaken by the US Geological Survey (USGS) in 2012, it has been observed that the majority of undiscovered oil in the Arctic Sea region is present in the Arctic provinces of north America, followed by the Arctic provinces of the Former Soviet Union (FSU). The majority of undiscovered natural gas in the Arctic Sea region is located in the Arctic provinces of FSU, followed by the Arctic provinces of north America and Europe.

In the Russian Arctic, platforms are being built, which will be capable of withstanding high waves, typhoons and earthquakes. These oil and gas platforms were built as part of the Sakhalin II project, which is considered to be one of the largest export oriented oil and gas projects. These three platforms are the Piltun-Astokhskoye-A platform, also known as "Molikpaq", and the Piltun-Astokhskoye-B and Lunskoye-A platforms. These platforms have been built with giant concrete legs, which are very thick and round in shape in order to be able to withstand earthquakes measuring up to eight on the Richter scale (Shell, 2012b).

The Russian government is taking steps to strengthen exploration operations in the Arctic, through the introduction of new tax incentives. There are three forms of taxes applicable for oil and gas companies in Russia: mineral extraction tax, oil export duty, and corporation tax. Previously, the Russian taxation system did not offer any incentives, but after the return of Vladimir Putin to the role of president, steps are being taken to reduce the tax burden. The government is planning to abolish export duties for offshore exploration operations. It is mandatory for foreign companies to connect with state oil and gas companies, such as Rosneft or Gazprom, to carry out exploration activities. There are plans to submit a proposal to the government in late 2012, focusing on the abolishment of export duties for a period of between five and fifteen years, depending on the viability of the project. President Putin has also announced that once the production of the field begins, these taxation rules will not be changed for a period of 15 years.

Russian oil and gas giants Rosneft and Gazprom are co-operating with IOCs to explore and develop oil and gas resources in the Arctic region. Rosneft, a leading Russian oil and gas company, has entered into a joint venture with ExxonMobil Corporation, Statoil and Eni SpA in order to explore vast oil and gas resources in the Arctic region. Gazprom, which has a monopoly in the gas market in Russia, has entered into a joint venture with Shell.

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Rosneft and ExxonMobil have entered into an agreement regarding the exploration and development of oil and gas resources in Russia, particularly in the Kara Sea and Black sea. This strategic agreement will benefit both companies in terms of sharing expert knowledge and technology. ExxonMobil has acquired interest in Rosnefts assets in the Arctic region. Through this deal, Rosneft benefited from ExxonMobils technical knowledge of Arctic exploration, as well as gaining equity interest in certain of ExxonMobils assets in the US and Canada.

Rosneft and Statoil have entered into an agreement to carry out exploration activities in the Barents Sea and Sea of Okhotsk, which are contained within the Arctic Circle. The agreement also encompasses Rosnefts participation in exploration operations in the Barents Sea, along with the acquisition of stakes in international projects led by Statoil.

Rosneft and ENI Spa have entered into an agreement to carry out exploration activities in the Black sea and Barents sea. Eni will finance geological studies in order to ensure hydrocarbon potential and the commercial value of the fields. Rosneft has been engaged in joint ventures with a number of different international players that possess expertise and knowledge of offshore production, and are equipped with sophisticated technology.

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Gazprom has also formed a joint venture with Shell for the development of the Sakhalin II project. The Sakhalin region is one of the prospective areas into which Gazprom is interested in investing. Between 2008 and 2011, the total investment made by the company in the Sakhalin region amounted to more than RUB95 billion ($3.05 billion). In 2012, Gazprom plans to invest more than RUB43 billion ($1.38 billion) in the Sakhalin region projects.

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