Yamal-Nenets Governor: PDAs to open opportunities for oil and gas field development beyond the Arctic Circle
Establishing priority development areas (PDAs) in the Russian Arctic will allow private companies to develop oil and gas fields beyond the Arctic Circle, Governor of the Yamal-Nenets Autonomous Area Dmitry Kobylkin said in an interview with TASS.
Earlier, the Ministry of Economic Development proposed establishing PDAs in the Arctic in 2017 instead of 2020.
"In my view, preferences for companies entering the regional market through the PDA system must be introduced in the areas from the Arctic Circle and above. We have received many proposals. Foreigners have been asking at the very least for a ban on tax changes in order to avoid a barrier to their investment. We must understand that the further you go in the Arctic, the closer to the shelf, the more difficult it is to produce oil and gas and the higher the original cost," the Governor explained.
He added that introduction of concessions will help speed up major projects in the Arctic.
"Our land has huge deposits of oil and gas, which are waiting for the barrel price to get above $150-$160. This may never happen though. Therefore, to begin development of the fields, we need certain tax concessions and state support for infrastructure development," Kobylkin said.
TASS reports that in early September, the Ministry of Economic Development proposed establishing PDAs in the Arctic in 2017, or three years before the planned date in 2020. The proposal was announced by Economic Development Minister Alexei Ulyukayev at a meeting with President Vladimir Putin. Ulyukayev also proposed extending the Far Eastern free zone regime to Arctic ports.
The Yamal-Nenets Autonomous Area accounts for over 70 percent of Russia's proven natural gas reserves and 18 percent of proven oil and natural gas condensate. There are a total of 234 open oil and gas fields in the area, 77 of them being in commercial development, and the others are being prepared for production or are subject to exploration works. Eleven percent of initial gas reserves and five percent of oil reserves in Yamal have been developed.
The initial total reserves, including the shelf, amount to 147 trillion cubic meters (some 16 trillion produced over the 50 years of development) of gas, 10 billion metric tons of oil and 9.8 billion metric tons of condensate.