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Our Arctic Neighbors: Russia coping with transport of Arctic oil No need to build planned new infrastructure in near future due to relatively modest oil production volumes, expert says Sarah Hurst For Petroleum News
Some of Russia’s ambitious plans to develop oil transportation infrastructure in the northwest of the country are unlikely to be realized, according to expert Mikhail Grigoriev. In an article that was commissioned for a report titled “Oil transport from the Russian part of the Barents region, status per January 2009,” published by the Norwegian Barents Secretariat, Grigoriev analyzed the current situation at all the ports in the region.
“Multiple declared projects for construction of new port oil transshipment terminals … are hardly going to be implemented in the foreseeable future. They have been abandoned long before the landslide of world oil prices,” said Grigoriev, a member of the Russian government’s coordination council for development of the country’s fuel and energy complex and is director of geological consulting company GECON.
State oil company Rosneft owns the entire infrastructure chain, including railroad facilities, between the Timan Pechora oil fields and the port of Arkhangelsk, Grigoriev said. The company’s acquisition of double-hulled Arctic shuttle tankers of about 30,000 tons deadweight for oil supply from Arkhangelsk to the Belokamenka floating storage and offloading vessel in Kola Bay (which Rosneft also owns) bodes well, he said.
The first tanker, the Arkhangelsk, started operations in December 2008, and the company plans to launch two more tankers, the Privodino and the Murmansk, in 2009.
Minimum tonnage required On the other hand, the Belokamenka must handle a minimum of 2.5 million tons (18.3 million barrels) of oil per year in order to remain economic, Grigoriev said.
“It is evident that as oil shipment from Varandey terminal increases, Rosneft is most likely to start decreasing its own oil transshipment volumes from Arkhangelsk,” he said.
The prospects for state-owned Gazprom’s Prirazlomnoye oil field in the Pechora Sea are “not defined,” Grigoriev said. Two tankers for this project are being constructed in St. Petersburg. The quality of the oil from this field is low, Grigoriev said, adding that Gazprom expressed doubt as to the expediency of Prirazlomnoye in October 2008.
It is also “very unlikely” that construction will start on the Kharyaga-Indiga oil trunk pipeline in the Nenets Autonomous Okrug, as the existing transport infrastructure can cope with the peak volumes of oil expected to be produced in the region, he said.
“The real potential of oil transportation in the Arctic sea waters depends on development of Varandey terminal, which is mainly designed for transportation of oil from Yuzhno Khylchuyu field,” Grigoriev said.
Development dynamics ‘unstable’ “The dynamics of this field’s development are unstable, but it is expected that annual production volume at Yuzhno Khylchuyu field will reach 7.5 million tons (55 million barrels) by 2009, which … may enable terminal shipment volumes to be on the level of 8 million tons (58.7 million barrels),” Grigoriev said.
The Yuzhno Khylchuyu field in the Nenets Autonomous Okrug is being developed jointly by Lukoil and ConocoPhillips.
The unlicensed oil fields Titov, Trebs, Naulskoye and Labogansk, close to the Varandey terminal, “seem rather promising” as a resource base for the terminal, he said, and have the potential to produce about 250 million tons (1.8 billion barrels) of oil.
“The term of tender is presently not defined and depends on oil price dynamics,” Grigoriev said.
Based on the existing structure and dynamics of oil transportation volumes in Russia’s Arctic seas, an assumption can be made that in the near future (by 2012-15), annual oil volumes to be exported westwards from Murmansk will not exceed 12 million tons (88 million barrels), Grigoriev said.
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