A Potential Magadan Oil and Gas Play – Sea of Okhotsk

Although information regarding the Magadan shelf of the Russian Sea of Okhotsk is not available in the English language, I have translated and summarized most of what I have found to be important.  The development of this shelf is something that may be of significance in the not-so-distant future.  *This, especially due to the apparent overwhelming willingness of several Japanese companies to jump onboard as they have in the past with the Russian Sakhalin projects.  Note that the most important issue here is that Russia finds their perfect oil & gas firm to control +50% of the shares for a consortium firm as is normally the case.  Rosneft is likely to be their guy.

The offshore oil and gas reserves of the Sea of Okhotsk, Russia, are in no way exclusive to Sakhalin island.  5 blocks can be seen on the map which are believed to contain oil and gas; Magadan-1, Magadan-2, Magadan-3, Lisianski, and Kashevarovski.  (Магадан-1, Магадан-2, Магадан-3, Лисянский, и Кашеваровский)  Recoverable oil and gas are believed to be available as follows:

Only one press release from Rosneft’s Russian website was found with information relating to the Magadan offshore blocks.

In July of 2011, Rosneft released that it was looking to apply for development licenses for the 5 blocks in September, of 2011.  Furthermore, several Japanese firms have been anxiously awaiting a consortium of Russian and foreign companies in order to explore, develop and process these 5 fields.  This is due to Japan’s proximity to the shelf along with the regular participation of Japanese firms when it comes to the hydrocarbons of the Sea of Okhotsk.  Lastly, know that Japan is ranked 4th largest consumer of natural gas at just over 100 billion m^3 annually, thus it makes sense to get involved.  It would give them a chance to influence futures-style oil and gas contracts toward Japan.  Read the press release here (Russian)

On November, 17th of 2011, the Ministry of Natural Resources and Environment of the Russian Federation (MNERF) put out a press release on the issue.  It was proposed that the 5 plots be awarded Federal status.  It acknowledged that Rosneft was actively seeking licenses to explore, develop and produce within the plots.  It further stated that under Russian law, there would need not be auctions for Federal subsea plots.  The plots would be able to be given to any state-owned company directly.  It is assumed that in any case, licenses will have been granted to Rosneft by the end of the 2011.  Read the press release here (Russian)

In an article put out the next day (17,11,11) by Komersant.ru, the issue of company partners was discussed along with the above information put out by the MNERF.  Japanese candidates thus far are assumed to be the Japanese Inpex Corp., Japan Oil, and Gas and Metals National Corp.  Some, however, believe that it would be best to involve an American partner like ExxonMobil as they have swathes of experience in virtually every energy sector.  Read this article here.

I am still slightly skeptical of Rosneft’s willingness to participate in this project, as they have hardly made available any information concerning the matter.  They must not be too eager to find an American or European partner as they have barely given any attention to an English press.