RUSSIAN ENERGY INVESTMENT SHIFTS NORTHWEST: A STRATEGIC REORIENTATION

Several Russian majors, together with Western partners in various cases, have committed a growing share of investment budgets to projects in Russia's Arctic northwest lately. To date, production is still small in scale, limited almost entirely to the onshore, and overwhelmingly oil as opposed to gas. But as a result of investment programs currently under way, regional production levels are likely to rise sharply in coming years and will increasingly involve offshore development and gas as well as oil plays. However, full realization of the many ambitious ventures on the drawing board is by no means certain. The extent to which regional hydrocarbons are brought online and the commercial framework and economics of the projects will depend on the interplay of a variety of key independent variables, including

- the extent of geological and political pressures to develop new Russian oil territory-and the future performance of the Russian northwest in the competition for "new oil" investment
- the evolving regional upstream strategy of LUKoil, the leading player in development of the Timan-Pechora onshore
- the policy decisions of state players, especially Gazprom-Rosneft, which have a monopoly on major offshore opportunities so far
- the transportation solutions that are adopted in order to overcome the current shortage of infrastructure needed to bring new hydrocarbon streams to market

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