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#17 - JRL 7189
Russia says Western majors want to tap Arctic riches

MOSCOW, May 19 (Reuters) - Russia's resources ministry urged the government on Monday to approve its ambitious Arctic shelf exploration programme, saying local and Western majors were ready to invest billions of dollars in the country.

The head of the ministry's offshore hydrocarbon department Rinat Murzin said Norway's Statoil and Norsk Hydro, Russia's Gazprom and YUKOS, and France's Total were studying the documents and ready to take part in tenders to acquire Arctic oil riches.

"The only thing were are lacking so as to proceed with the plan is the government's final approval," Murzin told reporters.

Last year, the ministry said it planned to tender 22 oil and gas blocks on the country's Arctic shelf between 2002 and 2005, saying they could contain oil riches as great as those in Alaska's Prudhoe Bay.

The government postponed final approval to await the completion of Russia's global energy strategy in mid-2003.

"We would really like to hold tenders before October because after this deadline major oil firms will close their financial books for 2004 and we could lose another year," Murzin said.

The ministry wants to tender the rights to explore and develop oil and gas blocks in the Barents Sea containing 2.2 billion tonnes (16.1 billion barrels) of oil equivalent. The ministry did not say how it classified the reserves.

Russia's classification differs significantly from Western standards, which usually makes official estimates of possible recoverable reserves unreliable.

By comparison, Prudhoe Bay's initial proven reserves stood at 8.6 billion barrels and have since been upgraded to 13 billion.

Russia, the world's second largest oil exporter, produces the bulk of its crude in Western Siberia but as the area is being depleted, officials say the country needs to tap new reserves such as Eastern Siberia and the Arctic shelf.

The ministry wants the first three tenders for blocks, containing some 800 million tonnes (5.9 billion barrels) of oil equivalent, to take place this year.

The whole tendered area would cover 70,600 square km (27,260 sq mile) or around one percent of Russia's offshore territory, the ministry expects to collect some $700 million for the budget by 2005.

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