UPDATE 1-Russia minister offers compromise on Arctic oil control

Tue Jan 15, 2013 9:45am EST

MOSCOW Jan 15 (Reuters) - Russia's Natural Resources Minister offered a compromise on Tuesday between state oil companies fighting to defend their legal right to the country's Arctic offshore hydrocarbon deposits and private companies clamouring for new reserves.

Minister Sergei Donskoi told a meeting with the oil industry, chaired by Prime Minister Dmitry Medvedev, that non-state oil companies could get access to deposits rejected by state companies Gazprom and Rosneft.

In return, state companies could have an option on discoveries by non-state companies, he said.

The core of Russia's onshore conventional reserves is in decline and the country is hoping that exploration of its northern seas will reveal new fields to rival Samotlor, the West Siberian supergiant which helped sustain the Soviet Union through its final decades.

But those waters are the legal preserve of state companies, and the state gas export monopoly, Gazprom, and state oil company Rosneft have bitterly resisted suggestions by government officials that non-state companies should be allowed in.

The conflict also reflects a dispute between liberals in the Medvedev government, who say they favour more competition in the oil and gas sector, and powerful Rosneft chief executive Igor Sechin, an ally of President Vladimir Putin.

The Sechin camp argues that only state companies can shoulder the expense and responsibility of operating in sensitive offshore zones.

Private companies such as LUKOIL, for their part, have been driven abroad in search of reserves to compensate for declining output in Russia. LUKOIL chief Alekperov has been a vocal lobbyist for non-state access to the Arctic.

The government, keen to stave off declines in oil production which threaten a key source of revenue to cover heavy social and military spending in the state budget, also views Arctic development as a means of attracting investment and technology.

Rosneft has brought in ExxonMobil, Statoil and ENI as partners in some of its Arctic licence areas to draw on their experience in other countries.

Both have said they are willing to commit billions of dollars to offshore development. Alekperov said earlier on Tuesday that LUKOIL could spend 325 billion roubles on existing offshore projects alone, including projects in the Russian sector of the Caspian Sea.

Sechin said Rosneft would spend 1.2 trillion roubles ($39.6 billion) in offshore oil and gas exploration within the coming decade.

"Within the next 10 years we will spend 1.2 trillion roubles only for exploration works as part of our licencing obligations," Sechin told reporters when asked about offshore development.

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