Russian Oil Explorers Among Bidders for Norway Arctic Blocks

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December 4, 2015

By Mikael Holter

(Bloomberg) — Russian oil companies OAO Rosneft and Lukoil PJSC were among 26 explorers to apply for blocks in Norway’s new licensing round, which includes untouched areas in the Arctic Barents Sea along a previously disputed maritime border with Russia.

Applicants also included Norwegian units of Dea and EON SE, both acquired by Russian billionaire Mikhail Fridman, according to a statement from Norway’s Petroleum and Energy Ministry. Norway’s state-controlled Statoil ASA, Royal Dutch Shell Plc, BP Plc, ConocoPhillips and Lundin Petroleum AB, also applied for blocks.

“It’s promising for the petroleum activity in the north that a broad diversity of companies compete for new exploration acreage in the Barents Sea,” Petroleum and Energy Minister Tord Lien said in the statement. “The plan is to award new licenses before the summer, so the first wells can be drilled as soon as 2017.”

The 57 blocks on offer include 34 in the Barents Sea southeast, the first new area to be opened to exploration in Norway since 1994. The area was disputed by Russia until a 2010 border agreement put an end to a decades-long dispute between the two countries.

International sanctions have put limitations on the ability of Norwegian companies such as Statoil to participate in projects in Russia. Russian companies are still able to operate in Norway, with Rosneft participating in a well in the Barents Sea with Statoil in 2014. When Fridman’s LetterOne acquired RWE AG’s oil and gas unit last year, the purchase was rejected in the U.K. but approved in Norway.

Norway’s Petroleum Ministry said the round had attracted “strong interest” from applicants, though the number of companies bidding was down from 36 in the last licensing round in 2012. The number of blocks in the 22nd licensing round was 86.

Norway’s ambitions to develop oil and gas resources in the Barents Sea off its northern tip have been checked by the collapse in oil prices over the past 1 1/2 years. Statoil earlier this year delayed its Johan Castberg oil project for a third time, and has said it won’t drill as an operator in the area until 2017 after a record exploration campaign last year ended in disappointment.

©2015 Bloomberg News

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