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Russian ambitions in East Med dispute coincide with petroleum strategy

Russian Foreign Minister Sergei Lavrov told Cyprus on Tuesday that Moscow was ready to help mediate in any talks with Turkey over energy exploration in the east Mediterranean Sea.

A decades-old rift between Turkey and Cyprus, which is backed by Greece, has come to a head this year in disputes over commercial rights in the east Mediterranean, an area thought to be rich in natural gas.

“As far as your relations with Turkey are concerned, we are ready to promote dialogue, pragmatically based on mutual interests and in search of decisions, which will be fair and based on international law,” Lavrov said at a meeting with Cyprus President Nicos Anastasiades in Nicosia.

“Russia considers any steps that could lead to a further escalation of tensions (in the east Mediterranean) unacceptable,” he later added in a news conference.

NATO allies Turkey and Greece are at loggerheads over the extent of their continental shelves. Ankara also disputes the rights of Cyprus to explore for natural gas in the sea area around the island.

In related developments Russian Energy Minister Alexander Novak said it was extremely important for Russia and other oil producers to quickly regain, or even raise, their market share once the demand recovers, according to a ministry’s in-house magazine published on Tuesday.

To ensure Russia has not lost its oil market share after a global oil production cut agreement is over in 2022, Moscow has worked out a programme of unfinished oil wells, which could be launched once the output reduction deal expires.

“Once (oil) demand starts returning to the pre-crisis levels, it will be extremely important for Russia and for other oil producing countries to quickly regain market share, or even to raise it,” Novak said.

He did not say if the programme of unfinished wells, a scheme widely used by U.S. shale oil producers, has been approved by the government after being announced in May.

OPEC and its allies, a group known as OPEC+, are cutting output by 7.7 million barrels per day (bpd) until December to support prices as the coronavirus pandemic hammers demand.

Novak said that the government would offer three-year tax breaks for companies engaged in the programme from early 2022, estimating the number of the unfinished wells at 2,700.

Russia has mainly shut down old or less-productive wells that won’t necessarily be revived when the supply deal expires in April 2022, so the government is considering to help oil companies to ensure lost output can be replaced quickly.

To provide some respite for the oil services industry, Novak suggested companies engage in “green” energy production until oil demands recovers, he told the magazine.

He also said the same scheme could be used for the natural gas industry.

Source: Reuters

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