Oil Report

Russia says close to deal with Norway over Arctic

MOSCOW, Dec 11 (Reuters) - Russia said on Friday it would welcome joint oil and gas works with Norway on the Barents Sea and a deal was possible next year to close a decades-long dispute between the two major energy producers.

Russia’s resources ministry said in a statement Norway had proposed to sign a memorandum in the first half of next year after Russia proposed to jointly explore and produce energy in the disputed areas of the Barents Sea and the Arctic.

The dispute dates back to the early 1980s when the Soviet Union began exploration drilling in the so-called grey zone of the Barents Sea but stopped after Oslo objected.

Russia, the world’s largest energy producer, has repeatedly said it will not allow itself to be left behind in the race to exploit the Arctic, now being opened up by global warming, and has warned it would boost its military presence there.

Russia is in a race with NATO members Canada, Denmark, Norway and the United States to control reserves of oil, gas and precious metals that could become more accessible if the Arctic ice cap shrinks because of climate change.

Scientists say ice is receding so quickly that drilling for oil and gas high in the Arctic will soon become routine and cargo ships could sail between the Atlantic and Pacific along a new shipping lane much shorter than the routes used now.

Experts have said Moscow and Oslo are poised to find a compromise over the grey zone soon as relations between the two states improved after Moscow invited Norway's Statoil STL.OL to tap Russia's giant Barents Sea Shtokman gas deposit.

Reporting by Dmitry Zhdannikov; Editing by Dmitry Sergeyev; Editing by Keiron Henderson