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Russia may scrap arctic oil ambitions

Arctic oil programs may be too costly in current price scenario.

By Daniel J. Graeber

MOSCOW, Dec. 22 (UPI) -- Russian oil company Rosneft said Monday it may have to postpone its drilling program in the arctic temporarily, but doesn't rule out future operations.

Nikolai Malyshev, Rosneft's deputy director for operations on the Russian continental shelf, said the company was rethinking its current programs because of a lack of viable partners.

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"Maybe, due to the deterioration of the situation, we will somehow adjust our work schedule now," he said. "Rosneft operates and will continue its operations in the Arctic."

U.S. energy company Exxon Mobil has a partnership with Russian oil company Rosneft for work in the arctic waters of Russia. With Western sanctions impeding developments, the Russian government has placed a greater emphasis on domestic exploitation of arctic reserves.

Western powers have sanctioned the Russian energy sector in response to Moscow's reaction to political upheaval in Ukraine in November, which resulted in the former Soviet republic drawing closer to the European Union.

The Kremlin said Rosneft may focus more on Asia as it looks for new partners for exploration and production work in the arctic. Last month, Russian Natural Resources Minister Sergei Donskoy said the company said Rosneft needs to find partners in countries that have not sanctioned Russia.

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Low crude oil prices have starved major energy companies of the capital they need to fund exploration and production campaigns. Some campaigns in the arctic may need oil at around $75 per barrel to prove economical, about 25 percent above the current market for crude.

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