Russia's ambitious new petroleum firm Rosshelf has disclosed a proposed timetable for developing two offshore arctic fields.
The upstart domestic joint stock company, formed only last year, also has indicated that its interest in tapping resources on Russia's northern shelves extends far beyond the pair of arctic fields currently earmarked for development: the Barents Sea's supergiant Shtokmanovskoye gas/condensate reservoir and the Pechora Sea's much smaller Prirazlomnoye oil field for which it has been granted development rights (OGJ, Dec. 14, 1992, p. 19).
Rosshelf officials said Shtokmanovskoye "should be on production by 2000 if development begins by the end of 1993," the Moscow business weekly Commersant reported. It added that Rosshelf hopes Shtokmanovskoye, "the world's third largest gas field," will approach peak flow by about 2004.
Meanwhile, Rosshelf has set a target date of 1997 to start production from Prirazlomnoye oil field in the Pechora Sea, a southeast arm of the Barents Sea.
FUTURE TARGETS
With the backing of Russian President Boris Yeltsin, new Prime Minister Viktor Chernomyrdin (OGJ, Feb. 1, p. 20), and management of major enterprises in the military/industrial complex, nationalist oriented Rosshelf is well placed to achieve its goals of expanded activity.
Possible future targets for development include the Kara Sea's supergiant Rusanovskoye and Leningradskoye gas/condensate fields. They apparently have combined resources exceeding the 3 trillion cu m (106 tcf) of gas in place attributed to Shtokmanovskoye.
Statements by Rosshelf officials and government backers of the enterprise, together with Moscow press analyses, indicate that Rosshelf may become Russia's completely government controlled offshore oil and gas production monopoly.
Like its mentor, Russia's huge Gazprom gas monopoly, Rosshelf would have the facade of a joint stock company, with the state guaranteed ownership of enough shares to make all policy decisions.
ROSSHELF VICTORY
Late last year, Rosshelf won an unexpected victory over its competitor, the Arkticheskaya Zvezda (Arctic Star) group, for the right to develop Shtokmanovskoye field.
The Arctic Star includes Conoco Inc., Norway's Norsk Hydro AS, and Finland's Neste Oy and Metra.
Rosshelf has no offshore exploration or development experience but wields formidable political clout. Rosshelf officials say the firm's long range objectives in the arctic seas now have the enthusiastic approval of Yeltsin.
Equally important, just before Yeltsin was preparing to issue a decree granting Shtokmanovskoye and Prirazlomnoye field development rights to Arctic Star, Chernomyrdin threw his support to Rosshelf, causing a complete about-face that, in the opinion of top Russian petroleum specialists, was based almost exclusively on political rather than economic considerations.
Arctic Star, whose members have extensive offshore experience, especially in harsh environment conditions, had interim authority from the former Soviet government to conduct a feasibility study of Shtokmanovskoye development. It made a large investment in assessing the project and compiled extensive data.
By contrast, Rosshelf at the time it received development rights to Shtokmanovskoye had available only two variations of a hastily prepared study.
Rosshelf concedes it will require almost a year to prepare a detailed feasibility study. To date it has obtained only preliminary technical and economic data.
COST, FINANCING
Arctic Star estimated Shtokmanovskoye development would cost $8 billion, involve employment of 30,000 Russian workers for 15 years, and result in $400 million in contracts for Russian factories. Rosshelf said it could do the job for $5 billion, provide employment for 250,000 Russians for 15 years, and ensure $2.5 billion in contracts for domestic plants.
Recent Russian press reports suggest that both cost estimates are too low, with Rosshelf's figure the least credible.
Commersant now says the project will require at least $20 billion.
Labeling Rosshelf a "subsidiary" of Gazprom, Commersant indicated that Saudi Arabia and Kuwait had agreed to grant Gazprom $8.5 billion, with Japan providing another $700 million. But the figures are believed to cover total credits by those countries to Gazprom, not specific foreign investment in Shtokmanovskoye development.
The strongly nationalistic business weekly Ekonomika i Zhizn (Economics and Life) referred to "three large financial groups in the U.S., Taiwan, and Switzerland" as being interested in backing Shtokmanovskoye development while saying Arctic Star's source of financing for the project had not been confirmed.
Ekonomika i Zhizn gave no specifics regarding the purported foreign supporters of Rosshelf's Shtokmanovskoye proposal, and the paper's statement has not been corroborated by other sources.
SHTOKMANOVSKOYE YIELD
Russian officials believe Shtokmanovskoye will yield 1.25 trillion cu in (44 tco in its life. This, they say, could generate as much as $4 billion/year in gas export profits.
Commersant said a pipeline from Shtokmanovskoye definitely will terminate on Russian territory. If it is routed to the port of Murmansk, it will be about 600 km (373 miles) long.
The newspaper said, "It is not yet clear how much Shtokmanovskoye gas will be sold on Russian and western markets. The quotas will depend on the situation in these markets during the first and second decades of the next century.
"Rosshelf has tentatively decided that up to 80% of Shtokmanovskoye's gas will be sold on the domestic market. The joint stock company is considering construction of a gas liquefaction plant on a platform in the field."
PRIRAZLOMNOYE FIELD
Rosshelf obtained rights to develop Prirazlomnoye field at the same time it won a license to develop Shtokmanovskoye. But the Pechora Sea field wasn't initially mentioned when Yeltsin issued his decree favoring Rosshelf over Arctic Star in Shtokmanovskoye competition.
Prirazlomnoye is about 350 miles southeast of Shtokmanovskoye. Like other structures found in the Pechora Sea, it is far smaller than many prospects in the Barents Sea.
All of the Pechora Sea fields and structures are on an offshore extension of the big onshore Timan-Pechora petroliferous basin with its many oil and gas fields in the Komi republic to the south and Arkhangelsk province to the north. Few onshore Timan-Pechora fields are giants.
Prirazlomnoye is about 30 miles northwest of the small Arkhangelsk province port of Varandei in generally ice-free water. Severo-Gulyaevskoye oil and gas field is only about 25 miles west of Prirazlomnoye, and Pomorskoye oil and gas field is about 50 miles southwest of Severo-Gulyaevskoye, almost touching the Arkhangelsk province coast.
Those fields also may be turned over to Rosshelf for development.
The Pechora Sea is tiny compared with the Barents Sea, which lies west and north of huge Novaya Zemlya Island. Most Pechora Sea fields and structures are oil prone, while gas predominates in the Barents Sea.
An oil and gas field apparently extending offshore has been found on Kolguyev Island at the southwest end of the Pechora Sea. The southern tip of Novaya Zemlya marks the sea's northern boundary, while Vaigach Island and a strait leading into the Kara Sea are at the east end.
In contrast to the many oil gas fields found onshore near the Pechora Sea's southern coast, no discoveries have been reported on Novaya Zemlya or Vaigach islands.
Some oil has been produced from onshore Varandeiskoye field on the mainland coast. At least one small tanker shipment has been made from the poorly equipped port of Varandei.
If commercial production is obtained from Prirazlomnoye, Sever-Gulyaevskoye, and Pomorskoye fields, a permanent tanker route could be established along Arkhangelsk province's northern coast to Murmansk. These tankers also could handle the small oil production from Kolguyev Island's Peschanoozerskoye field.
Alternately, a pipeline route is being surveyed from Varandei field and discoveries farther south and east. This line, which also could handle Prirazlomnoye production, would run southwest to an existing pipeline tapping fields near the Pechora River.
Copyright 1993 Oil & Gas Journal. All Rights Reserved.
