Norway has been producing oil offshore since the 1970s and hardly needs help from relatively inexperienced Russia.

So presumably it’s for strategic reasons that Norway’s energy ministry decided this week to award Russian oil companies rights to explore on the Norwegian continental shelf for the first time. The two countries do after all share an offshore frontier.

Rosneft, the Russian state oil company, and Lukoil, the country’s biggest privately owned oil producer, were among 29 companies that won licenses in Norway’s latest bidding round. The results announced on Wednesday have opened up a large tract of the northern Barents Sea for exploration.

RN Nordic, Rosneft’s Norwegian subsidiary, was handed a 20 per cent stake in block 713 where Statoil, Norway’s state oil company, will act as operator.

Lukoil Overseas, Lukoil’s international division, won a 20 per cent stake in the 708 field, the easternmost block offered in the round and the nearest to the Russian-Norwegian offshore frontier. Lukoil was also awarded a 30 per cent interest in Block 719 in the central part of the Norwegian Barents Sea.

Russia is in a hurry to gain offshore expertise before onshore fields that provide most of the country’s 10.4m barrels per day sink into decline. Working alongside international companies on the Norwegian continental shelf should help the country move up the learning curve.

Rosneft has already sought foreign help, entering partnerships with Exxon, Italy’s Eni and Norway’s Statoil to explore Russia’s highly prospective Arctic Seas.

Lukoil has more offshore experience than its Russian peers and already produces oil in the Caspian and Pechora Seas. However, the Kremlin has set aside the Russian Arctic as a preserve for state controlled oil companies, effectively barring Lukoil from the area. A foothold in the Norwegian continental shelf will help Lukoil feel less left out.

Rosneft began building ties with Statoil last year, handing the Norwegian state company a one third stake in several Russian fields including the huge Perseevsky structure in the northern Barents Sea. Norway’s decision to award Rosneft acreage this week was a reciprocal move that will strengthen ties between the two state companies.

Opportunities for oil co-operation have opened up since Russia and Norway resolved an offshore boundary dispute that had vexed relations between the two countries for more than forty years.

A treaty signed by Russia and Norway in 2011 defined ownership of a large grey zone in the Barents Sea that is believed to hold large oil and gas reserves. It will take time, and a lot of expensive drilling, to find out which country got the best out of the deal.

The treaty stipulated that Russia and Norway should share any cross border oil and gas reservoirs that are found. Whether Norway likes it or not, closer oil ties with Russia have become unavoidable.

Related reading:
Cnooc teams up with Icelandic group in its play for Arctic oil
, FT
Rosneft and BP plan Arctic projects
, FT
Environment: Frozen frontiers
, FT

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