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The petroleum reserves of the Fisherman's Peninsula 2004-02-17

Speculations have long been swirling about the petroleum resources of the Fisherman's Peninsula (Poluostrov Rybachii), just a few kilometres from the Norwegian border. Now a Russian oil company prepares for test drilling and even claims there are offshore oil resources in the surrounding waters. Is a new petroleum Clondyke appearing at the Russian-Norwegian border?

Located in a heavy militarized zone, within sight from the Norwegian border, the Fisherman's peninsula has been left alone for decades by about everyone, except Russian Navy officers. That is about to come to an end. Russian petroleum interests now have the will and the funding to conduct a thorough mapping of the area.

Oil or gas?

Soviet geologists detected hydrocarbon gases, characteristic for gas condensate and oil, at the Fisherman's Peninsula several decades ago. In the 1970ies the Soviet Ministry of Geology recommended the drilling of several wells, but this drilling never took place. The peninsula and the surrounding sea remained one of few areas in the region which was not fully mapped by seismic studies.

In 1994, the Murmansk Oblast administration together with several big companies founded the Severshelf company, which was to conduct seismic studies of the peninsula. The results from Severshelf were positive and the company repeated the need for test drillings. However, the company did not find the necessary funding for further studies and exploration.

Murmanskneftegaz

Two years ago, in 2002, new focus was directed towards the Fisherman's Peninsula. Kulikov, one of the co-owners of the Murmansk Shipping Company, established the Murmanskneftegaz company, which in 2003 acquired licenses for hydrocarbon extraction at the peninsula. A drilling tower was moved to the place and everything looked set for exploration.

However, Murmanskneftegaz came to experience unexpected opposition. A group of reindeer herders had a land rental contract with the local Pechenga district authorities and kept more than 1000 animals at the peninsula. The herders saw the drilling tower as a threat to their flock and reported to the Murmansk Oblast authorities as soon as Murmanneftegaz began to prepare for drilling. Consequently, Murmanskneftegaz was given a 10,000 rubles fine for violating property rights. When the company later made another attempt to drill, it was fined yet again and threatened by the oblast Department of Natural Resources of being deprived the licenses.

The newspaper Nord-Vest Kurier now reports that an agreement is about to be reached between the reindeer herders, Murmanskneftegaz and the Pechenga district authorities. Most likely, the drilling will start up later this year.

Offshore oil

The Severshelf company is confident that there are gas resources at the Fisherman's Peninsula. But the question about amounts remains open. The top geologist at the Arktikneft company, Nikolay Samsonov, says to the Nord-Vest Kurier that he doubts there are enough resources for profitable production. However, Severshelf is backed by Murmanskneftegaz and its powerful owners in the Murmansk Shipping Company, who appear to be confident about the perspectives of the area. And they are not only confident about gas resources, but also oil, and not only at the peninsula, but also in the surrounding waters.

Last fall, head of Murmansk Shipping Company, Aleksandr Medvedev, appeared in front of the press with information about major offshore oil resources in the waters outside the peninsula. Together with specialists from Murmanskneftegaz he claimed that the field looks very promising and even concretely scheduled the shipping route of the oil. Tankers from Murmansk Shipping Company would load the oil at sea and then ship it to Murmansk terminal facilities.

The news stirred up the media. However, the credibility of the information still looks uncertain. Medvedev stated that oil production would start up already in 2005, which in that case will be the first ever offshore extraction in the Barents Sea. Much more information about the oil field has not leaked out and several specialists seriously question the whole story. Vice president of the Severshelf company, Ruslan Tsaliev, says to BarentsObserver that the area does have valuable gas resources but he doubts there is much oil. He calls Medvedev's statement an unfortunate ‘exaggeration', which could have served as a PR move to attract attention of the Fisherman Peninsula and the area as a whole.

However, Tsaliev does confirm that Russian oil explorers have detected oil reserves further out at sea, not too far from the area. A scientific report from the Russian Academy of Sciences (2002) does also not exclude that there is oil at and around the peninsula.

The drilling at the peninsula by Murmanskneftegaz will give an answer to many of the questions. If started up, commercial hydrocarbon extraction at or around the Fisherman Peninsula will become object of major discussion in the nearby Norwegian areas. It will also further strengthen the need for joint Russian-Norwegian policies and cooperation within oil and gas industry in the Barents Sea.

(By Atle Staalesen)

(BarentsObserver.com, 17 February 2004-02-16)