Oil companies might get access to offshore oil deposits via consortiums, according to Minister of Natural Resources Sergey Donskoy, quoted by Vedomosti. Consortiums are to be approved by the government and state companies are not required to participate. However, the companies must have experience of offshore development and sufficient technical and financial resources.
The ministry’s proposal assumes two types of licence: seismic and exploration/development. The seismic licence can be granted to Russian-owned companies, while both Russian and foreign investors can participate in exploration and development. The proposal has been agreed with the Ministry of Energy and the Ministry for the Economy, and has been sent to the government. In the meantime, no new licences are to be granted.
Lukoil might potentially get access to the Russian shelf if these changes go through, given that the company satisfies the requirements. It requested similar amendments to the law at the end of 2013, as it was interested in a production licence for its Centralnoye field in the Caspian Sea, two licences in the Baltic Sea and one in the Barents Sea. Nevertheless, in the current macro environment, we doubt that companies would allocate any sizable resources to developing offshore greenfields. Although the news can be considered as supportive for sentiment on Lukoil, we do not think it will have any visible impact on the company’s fundamentals and so view it as neutral for the company at the moment.
To recap, the current provision of subsoil usage law stipulates that licences for developing offshore oil deposits can only be granted to state-owned companies. The possibility of allowing independent companies to develop shelf projects has been actively discussed since the sanctions against Russian oil companies were introduced. The Ministry of Energy, Ministry for Economic Development, Ministry of Natural Resources and the Federal Anti-Monopoly Service are due to prepare their official positions on the issue by 20 April.