Russia Could Allow Foreign Investors in Arctic Projects: Energy Minister

Russia’s Energy Ministry considers it reasonable to attract foreign investors to exploration of the Russian Arctic shelf for unallocated licenses, minister Alexander Novak told reporters on Tuesday, according to TASS.

“We believe that it may be considered within the unallocated subsoil reserve fund,” he said, adding that today the law does not prohibit attracting foreign companies to Arctic projects, though “additional instruments, mechanisms” could be developed for making them more attractive.

Novak added that the necessity to speed up geological exploration in the Arctic was discussed at the meeting headed by Deputy PM Dmitry Kozak and the Presidential Plenipotentiary Envoy to the Far Eastern Federal District Yury Trutnev on August 26.

“Current recoverable resources (on the Arctic shelf) are insufficient so far, which is why geological exploration is required among other things,” he explained.

The Ministry of Energy, in particular, advocates changing the fiscal conditions for developing projects on the Arctic shelf of the Russian Federation and proposes the introduction of tax benefits.

“The issue that needs to be discussed, and, in my opinion, it is very important is the change in the fiscal system, which would allow, in principle, making projects in the Arctic more attractive,” Novak said. In his opinion, today’s conditions are “economically unattractive due to the fact that profitability is very low.”

Currently, according to the law, only state-controlled companies (in which the state owns at least 50%) with at least five years of experience working on the shelf, can apply for the development of the subsoil of the Russian shelf of the Arctic. Since 2016, a moratorium has been in place to issue new licenses for offshore fields, and now only Gazprom and Rosneft are allowed to the shelf.