Through the Wire

Chevron in Talks on Russia Arctic Oil

March 1, 2012
| Energy
| Russia and Central Asia
By Vladimir Soldatkin

MOSCOW, March 1 - U.S. oil major Chevron has met a Russian government official to discuss possible participation in tapping vast Arctic oil reserves, which are currently off limits for non-state corporations, the Ministry of Natural Resources said on Thursday.

The statement came a day after Russian Prime Minister Vladimir Putin said he intended to free up access to the Northern offshore fields.

"Your country owns giant reserves, and absence of significant projects in the Russian Federation is a huge gap in our portfolio," Andrew McGrahan, president of Chevron Neftegaz, a Chevron affiliate, is quoted as saying by the ministry at the meeting on Wednesday.

"Chevron is interested in working at Russia's offshore (reserves)," a Chevron spokeswoman in Moscow told Reuters.

McGrahan met the deputy minister Denis Khramov to discuss "investment climate and tax regime improvement for oil companies in Russia," the ministry said.

Khramov said the government is working on legislation reforms, which forsee additional tax benefits to insure investment returns.

"All the proposals are stipulated in the programme of continental shelf development till 2030, prepared by the ministry," Khramov is quoted as saying.

He added that the programme would be discussed by the government in the second quarter. It is however unclear what shape the government would take up after the presidential elections on March 4.

Putin is certain to win the election, according to the public opinion polls. He said on Wednesday the existing law - which limits Arctic oil and gas development to the state-owned Gazprom and Rosneft - hampers output.

A relaxation of tough Russian laws on foreign investment in strategic mineral fields and offshore hydrocarbon resources - estimated at more than 100 billion tonnes of oil equivalent - has long been sought by foreign investors.

Chevron's main activity in the former Soviet Union is participation in the Caspian Pipeline Consortium, which connects Kazakhstan's Caspian Sea oil deposits with Russian Black Sea port of Novorossiisk. (Reporting by Vladimir Soldatkin; editing by Megan Davies)

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