New Oil Developments in the Arctic

Russia’s Gazprom has just signed an agreement with Spanish utility Gas Natural. As part of the arrangement, gas from Russia’s Shtokman Field will eventually be sold on the Spanish market as part of an effort to increase Gazprom’s presence in Europe. The Shtokman Field will come on line in 2014 and will deliver gas through the Nord Stream pipeline from Russia via Germany, which is presently under construction in the Baltic Sea.

The agreement also makes room for Spanish utilities to participate in natural gas projects in Russia, such as in the Yamal Peninsula. Already, Russia is working with Norway’s Statoil and France’s Total in the Shtokman Field, where the two companies possess 25% and 24% stakes, respectively. Gazprom CEO Alexei Miller noted,

“We are considering the possibility of our Spanish colleagues working in Russia in the future. In the first place, this concerns the Yamal liquefied natural gas project.”

Russia will be a new energy supplier for Spain, which currently receives most of its gas from Algeria.

For news from RIA Novosti, click here, and for news from El Pais (Madrid), click here (in Spanish).

Lofoten Islands
Lofoten Islands

In Norway, the Norwegian Oil Industry Federation (OLF) is pushing to open up the areas around the Lofoten and Vesteraalen Islands to exploration and drilling. However, the government, led by the Labour Party, has said that it will not make a decision until after the elections in 2009. The current government is based on a coalition with several other parties including the Socialist Party, which is vehemently opposed to any new drilling.

Environmentalists are also naturally opposed to any new drilling in the Arctic, particularly around the scenic Lofoten Islands, which are important for Norway’s fishing and tourism industries.

The OLF, on the other hand, is concerned about the falling productivity of Norwegian oil wells. It is estimated that the areas the OLF wants to explore contain 3.4 billion barrels of oil. OLF CEO Per Terje Vold claimed,

“Access to new and attractive exploration acreage would slow this decline, sustain government revenues to the benefit of the community, keep 250,000 people in work and open opportunities for 1,000-2,000 new jobs…It’s a crucial requirement that the discussion on maintaining Norway’s welfare state builds on accurate information.”

Indeed, oil revenues are one of the pillars holding up the generous Norwegian welfare state in the present and in the future, with its $400 billion Government Pension Fund.

For the press release from OLF, click here (in English).

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