Russia May Demand Oil Spill Fund as BP Looks Offshore

Russia may require oil producers tapping offshore deposits to set aside cash to cover damages from possible spills as OAO Rosneft and BP Plc seek to explore for Arctic resources.

“The figures will depend on the scale of activity at offshore fields,” Denis Khramov, a Natural Resources Ministry official, told reporters today in St. Petersburg. “One amount if it’s just about drilling one well, and another amount if it’s about drilling 10 wells.”

BP has set aside $40 billion to pay for damage after its Macondo well leaked crude into the Gulf of Mexico for 87 days last year, the worst spill in U.S. history. State-run Rosneft plans to explore in the Kara Sea with BP and the Black Sea with Chevron Corp. as traditional onshore fields age. Russia, the world’s largest oil producer, aims to keep output at 10 million barrels a day for at least a decade.

“We don’t have the technologies to extract oil in these conditions, not even to mention to contain possible spills below the heavy ice cover,” said Artem Konchin, an oil analyst at UniCredit SpA in Moscow. A fund would probably cover the potential costs of sealing wells if equipment fails, he said.

The ministry has submitted draft legislation to the government for review, Khramov said.

Offshore Licenses

Russia may ease laws limiting access to offshore oil deposits to spur exploration and development, Khramov said. The subsoil resources agency has issued 53 offshore licenses and is considering 43 applications from state-controlled energy producers Rosneft, OAO Gazprom and OAO Zarubezhneft, some for the same permits, he said.

The ministry wants to allow foreign and non-state Russian companies to conduct initial research and evaluation of offshore deposits, which is now limited to state companies, Khramov said. They would then gain the right to participate in the project as a minority partner with a state company or get compensation for their work, he said.

“We are working on expanding the list, as a minimum to include subsidiaries of state companies,” Khramov said. “Without liberalizing the legislation, we won’t be able to fulfill all the plans.”

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net; Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

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