Lukoil Urges Russian Oil Competition to Catch Up With U.S. ShaleAnna Shiryaevskaya
OAO Lukoil, a non-state crude producer seeking access to Russia’s Arctic resources, urged competition as the best way for domestic producers to catch up on technology gains that spurred U.S. oil and gas output growth.
Lukoil is proposing setting up a body that would handle bids for offshore licenses, likening it to the Norwegian Petroleum Directorate, to expand access and boost competition, billionaire Chief Executive Officer Vagit Alekperov said in an article published today in state newspaper Rossiyskaya Gazeta.
Russia’s Arctic continental shelf is limited to state-run companies such as OAO Rosneft, the country’s largest oil producer, and gas producer and exporter OAO Gazprom. The government, which gets half its budget revenue from oil and gas, is revamping tax breaks while seeking to maintain oil output at post-Soviet highs of more than 10 million barrels a day. Russia ceded its place as the world’s largest gas producer to the U.S. in 2009.
Russia may “easily fall behind” in technological progress without “civilized, equal competition,” Alekperov said. A licensing organization “could qualify companies not on the basis of ownership structure, but experience, efficiency and level of tax payments to the Russian budget.”
While Russia has enough Arctic resources and unconventional deposits in western Siberia to meet to global market challenges, non-state companies are needed to unlock the potential, Alekperov said. The government has been discussing whether to broaden offshore access, with measures such as allowing non-state companies to develop areas rejected by state producers.
“Russia and the national energy companies must be ready for the upcoming changes and more intense competition on the global market,” he said. The U.S.-pioneered “revolution” in producing natural from rocks, “all started with competition, a desire to be more efficient than others,” Alekperov said.
Lukoil plans to invest more than 300 billion rubles ($10 billion) to start production at the Korchagin and Filanovsky fields in the Caspian Sea, Alekperov said.