Russia wants Total out of Arctic project

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The headquarters of Total,  in La Defense business district, near Paris. (Martin Bureau/AFP/Getty Images)
The headquarters of Total, in La Defense business district, near Paris. (Martin Bureau/AFP/Getty Images)
The Kharyaga oil project should be taken over by a Russian company, the country’s Ministry of Energy argues.

Total has failed to meet production targets and should be deprived the project operator responsibility, the ministry says. The French company has also failed to reduce the level of flare gas from the oil installations, newspaper Vedomosti reports.

The ministry in late December proposed to hand over the project management to Russian companies, an unnamed government representative told the newspaper. The likely contender for the position is state-owned Zarubezhneft, which from before controls a 20 percent stake in the project.

Total has been in charge of the Kharyaga project since the project Production Sharing Agreement (PSA) came into force in 1999. The company’s stake was reduced to 40 percent (from 50%) in connection with theinclusion of state-owned Zarubezhneft in 2009.

Also Statoil has been part of the project consortium from the very start and today controls a 30 percent stake. An exclusion of Total from the project could affect also the involvement of the Norwegian company.

Not able to boost production

The Kharyaga partners have not been able to boost production to the original plans. Peak production of 3,2 million tons planned for 2013 has been downscaled to about 2 million tons planned for 2017-2018.

The Kharyaga is one very few Russian oil fields managed on the principles of a PSA and discontent has repeatedly been high in the federal ministry. Speculations about a reshuffle in the project consortium have been running high, but Total and partners have still managed to keep their positions.

The field is located in the Nenets Autonomous Okrug, a highly oil-rich Arctic region. It holds about 49 million tons of extractable resources.

As previously reported, the Kharyaga was in 2012 connected by pipeline with the Varandey terminal on the Arctic sea coast.

Related stories from around the North:

Canada:  Canada ponders exceptions to relief well rule for Arctic oil drilling, Alaska Dispatch

Finland: Solar and wind power yield cheapest energy say Finnish experts, Yle News

Greenland: Arctic oil and gas must stay in ground to restrict warming to 2°C says study, Blog by Mia Bennett

Iceland:  From Arctic Circle 2013-2014, a big drop in the price of oil, Blog by Mia Bennett

Norway:  Norway offers 34 Arctic blocks along Russian border, Barents Observer

Russia: New Russian oil fields along Barents ice edge, Barents Observer

Sweden: Lower electricity bills for Swedes, Radio Sweden

United States:  Oil prices expected to stay low through 2016, Alaska Dispatch News

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Atle Staalesen, The Independent Barents Observer

Atle Staalesen, The Independent Barents Observer

For more news from the Barents region visit The Independent Barents Observer.

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