March 29 (UPI) -- Developing oil from the Arctic regions of northern Russia is still a strategic interest despite the prohibitive market factors, a minister said.
A subsidiary of Russian oil company Gazprom Neft reached a milestone last year with the production of its 10 millionth barrel of oil at the Prirazlomnoye field. The company revised its production schedule higher after a review of data found annual peak production rates could reach 35 million barrels.
Oil from the field is transported by two doubled-hulled tankers designed to ensure safe delivery from the Arctic north. Discovered in 1989, the Prirazlomnoye is roughly 35 miles from shore in the Pechora Sea.
Advocacy groups like Greenpeace have been critical about oil operations in the extreme climates of the Arctic north, saying an oil spill in the region would be catastrophic and difficult to control. Development is costly, with most Russian operators waiting for oil to move above $75 per barrel to review further opportunities.
The price for Brent crude oil is around $52 per barrel, but Russian Minister of Natural Resources Sergei Donskoi said that, while the market was prohibitive of further development, the Arctic region was still a strategic development opportunity.
"Like most experts, I am sure the unique deposits, playing key roles in the global balance of reserves, are bound to be opened exactly there," he was quoted as saying by Russian news agency Tass.
In one of his last moves in office, U.S. President Barack Obama used the powers of the office to ban offshore oil and gas drilling in parts of the Atlantic Ocean and in the Arctic waters off the coast of Alaska.
Michael Levine, a senior counsel of advocacy group Oceana, told UPI last year there's no compelling reason to include Arctic oil and gas in federal plans. Given the economic reality of the constraints presented by oil at $50 per barrel, he said drilling campaigns in extreme areas are best left idled.
Russian oil producer Gazprom Neft starting sea trials in November for a vessel meant to support oil work, including spill response, in extreme Arctic climates. The company made its first winter shipment of oil from the Novy Port field in the Arctic north to the European market in early 2015.