Russian Prime Minister Vladimir Putin gave the go-ahead on Wednesday for commercial oil production in the Russian part of the Caspian Sea by the country's largest independent oil producer, LUKoil.
LUKoil said production at the Yury Korchagin offshore oil field could reach an annual output of 2.5 million metric tons of oil and that it planned to produce 343,000 tons of oil at the field this year.
The company has invested a total of 34.4 billion rubles ($1.2 billion) in the field that holds an estimated 270 million barrels of oil equivalent and 63.3 billion cu m of natural gas.
Putin said Russia had to ensure the development of its continental shelf to maintain stable hydrocarbon production in the long term.
"I am sure this unique experience will come in handy in the future, when large-scale continental shelf projects will be launched," he said.
Putin also pledged to consider the issue of granting Russian oil companies licenses to develop what he termed strategic deposits.
At present, only companies in which the state holds an interest of over 50% and that have been working on the Russian continental shelf for at least five years are eligible to develop there.
Deputy Energy Minister Sergei Kudryashov said $27 billion would be needed to ensure the high-paced, intensive development of the Russian part of the Caspian and such development was unviable without significant tax breaks.
He added that in the intensive scenario, a total of four oilfields were to be developed and gas and petrochemical processing capacities created.
Between 1999 and 2005, LUKoil discovered six oil and gas fields in the northern part of the Caspian Sea, with aggregate estimated reserves of 4.7 billion barrels of oil equivalent.
LUKoil CEO Vagit Alekperov said in September total investment in the production of hydrocarbons in the Caspian Sea would reach $12 billion in the next six and a half years.
ASTRAKHAN, April 28 (RIA Novosti)
