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Russian energy giant set to ditch Lundin’s Caspian project

Russian state oil and gas firm Gazprom is set to revoke its option to acquire a majority stake in Swedish firm Lundin Petroleum's Lagansky project in the Caspian Sea, according to a report in Swedish business daily Dagens Industri (DI) on Tuesday.

Published: 19 May 2009 09:25 CEST

According to the newspaper’s anonymous sources, intensive discussions are ongoing over the sensitive deal which could be worth up to several billion kronor.

“The option is not yet taken up and discussions are ongoing, that is all I can say,” confirmed Maria Hamilton at Lundin Petroleum.

According to DI’s sources discussions are ongoing with a major Russian oil firm over assuming a majority stake in the Lagansky block in the central Caspian Sea basin.

Gazprom negotiated an option of a 50 percent share plus one in the Lagansky block licence in 2007.

According to media reports at the time, Swedish minnow Lundin Petroleum had been struggling for some time to secure the myriad of licences required to continue prospecting in the Lagansky area.

Once Gazprom came on board, however, the licences were duly approved by Russian authorities without further ado.

Gazprom has not yet taken up its option and DI reports that the firm is instead planning to focus its investments on its larger projects in the wake of the financial crisis.

It is in Lundin Petroleum’s interest to reach agreement as it would see them receive 400 million kronor ($51 million) to cover some of their reported 1 billion kronor in investment costs already incurred.

A deal with an outside partner would also enable Lundin Petroleum to place a price tag on their Lagansky block licence and therefore an estimate of its value.

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NGOs take Norway to European Court over Arctic oil exploration

Northern Norway. Photo by Vidar Nordli-Mathisen on Unsplash.

It’s the latest turn in a legal tussle between environmental organisations Greenpeace and Young Friends of the Earth Norway on one side and the Norwegian state on the other.

The organisations are demanding the government cancel 10 oil exploration licenses in the Barents Sea awarded in 2016, arguing it was unconstitutional.

Referring to the Paris Agreement, which seeks to limit global warming to less than two degrees Celsius above pre-industrial levels, the organisations claim that the oil licenses violated article 112 of Norway’s constitution, guaranteeing everyone the right to a healthy environment.”

The six activists, alongside Greenpeace Nordic and Young Friends of the Earth Norway, hope that the European Court of Human Rights will hear their case and find that Norway’s oil expansion is in breach of human rights,” Greenpeace said in a statement.

In December, Norway’s Supreme Court rejected the claim brought by the organisations, their third successive legal defeat.

READ MORE: Norway sees oil in its future despite IEA’s warnings

While most of the judges on the court agreed that article 112 could be invoked if the state failed to meet its climate and environmental obligations– they did not think it was applicable in this case.

The court also held that the granting of oil permits was not contrary to the European Convention on Human Rights, in part because they did not represent “a real and immediate risk” to life and physical integrity.

“The young activists and the environmental organisations argue that this judgment was flawed, as it discounted the significance of their environmental constitutional rights and did not take into account an accurate assessment of the consequences of climate change for the coming generations,” Greenpeace said.

On Friday, the Norwegian government unveiled a white paper on the country’s energy future, which still includes oil exploration despite a warning from the International Energy Agency (IEA).

The IEA recently warned that all future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050.

The Norwegian case is an example of a global trend in which climate activists are increasingly turning to courts to pursue their agenda.

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