Norway and Russia to step up cooperation in hunt for Arctic oil

There are major hurdles to Arctic oil exploration, including strong opposition from environmental groups and high costs due to lack of infrastructure. Gazprom photo.

Arctic oil reserves in unexplored Barents sea areas crucial

OSLO, Nov 28 (Reuters) – Russia and Norway have agreed a deal to acquire new seismic data from the neighbouring countries’ Barents Sea border region to boost the search for Arctic oil and gas, the Norwegian oil minister told Reuters on Monday.

As developed parts of the Norwegian shelf mature, the Barents Sea and the significant oil and gas reserves that its unexplored areas are believed to hold become increasingly crucial to future production.

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However, exploration in the Arctic has faced strong opposition from environmental groups and could be more expensive to develop because of a lack of existing infrastructure.

“We believe there are significant resources along the border,” Tord Lien, Norway’s minister of petroleum and energy, said after a meeting in Oslo with Russia’s natural resources minister, Sergei Donskoi.

Lien said that an agreement had been reached to allow the collection of seismic data across the border, adding that he expects to sign the deal before Dec. 24.

The two countries, which settled a 40-year border dispute in 2010, will also hold discussions on how to split potential future discoveries that straddle the border.

The so-called unitisation talks will take place in Moscow during the first half of 2017.

“It is clear that, should we find resources that cross the border between Norway and Russia, we would have to agree on unitisation and share the revenues,” Lien said.

In May Norway awarded 10 new licences in the so-called 23rd licensing round for new exploration areas, which for the first time is granting access to the offshore border zone with Russia.

“We know that one of the (geological) structures is crossing the border, but we don’t know if the resources also do,” Lien said.

Aker BP, Lukoil, Statoil, Lundin Petroleum, Chevron and ConocoPhillips are among the companies that have won exploration licences close to the border.

Others are less enthusiastic, however, with Royal Dutch Shell, Total and Eni not bidding for stakes in the recent licensing round.

The two countries have already signed a deal to exchange older seismic data from the border zone to help to determine where to drill.

Norway’s TGS and PGS, which scan the seabed for hydrocarbons, could benefit from the increased activity during a time when oil industry investment spending has been hit by low crude prices.

(Reporting by Stine Jacobsen; Editing by Terje Solsvik and David Goodman)