In what would be a boon to the Russian economy, BP Chief Executive Tony Hayway announced that his company is interested in drilling for oil and gas in the Russian Arctic. BP is already one of the largest foreign investors in Russia, while operations there account for 20% of BP’s worldwide oil and gas production. BP’s profits from the world’s largest natural gas exporter and second largest oil exporter come mainly through its 50% share of TNK-BP. TNK-BP is a Russian oil company which operates primarily in western Siberia and the Volga-Urals region. In 2008, TNK-BP had over $4.1 billion in capital assets in Russia.
Today, during his speech to the Academy of National Economy in Moscow, Hayway said,
Developing the Russian Arctic, for example, requires an industry which can provide innovative solutions to manage risk and overcome technological challenges.
This is already happening in remote onshore Arctic areas such as the giant Russkoe oilfield which was discovered 40 years ago, but has not yet been developed as the oil is highly viscous, the geology complicated and the location remote. Drawing on expertise from BP, TNK-BP has now successfully drilled test wells. The plans are to employ a thermal recovery technique using hot water and steam, along with the construction of infrastructure that includes a gas-fired power plant and new access roads.
BP has also been very active in the offshore Arctic regions, which represent an important new frontier for the industry. We have worked for decades in areas such as the North Slope of Alaska, the Canadian Arctic and Northern Norway. Last year, we conducted a seismic survey in the Canadian Beaufort Sea, which was the most northerly ever carried out. Despite the challenging conditions, we carried out the operation without any injuries, accidents or harm to the environment.
Building on this expertise, we would certainly welcome the opportunity to deploy our technology and skills to explore and produce Arctic resources in Russia as well.
BP has worked in the Arctic since 1969, so it’s no surprise that it would want to expand its operations in the Russian Arctic. The company recently took over a drilling rig in the Arctic from Norwegian company StatoilHydro, demonstrating that it is indeed serious about drilling in the Arctic within every country’s borders, whether Norway, the U.S., or Russia. BP also hopes to emphasize cutting-edge technology as it drills for oil and gas and to help Russia’s economy diversify, such as by building a better supply chain for industry. Whether all this talk of diversification – something that both Medvedev and Hayway have championed – will actually have visible results has yet to be seen.
Links
“BP in the Arctic and Beyond” (PDF)
“BP offers technology, expertise to develop Russia’s Arctic assets,” RIA Novosti
“BP takes over Arctic drilling rig from StatoilHydro,” Barents Observer
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