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 RUSSIA
Former Soviet Union
Russia has been producing substantial oil since the
1890s, progressively as each area began to deplete - from the southern
Caucasus region; along the basins west of the Urals; and most recently
from West Siberia.
 Increased
investment, benefiting from rising prices, has recently led to major
increases in oil production, reversing the declines created by the fall
of communism and consequent shortages of investment. Output is expected
to continue until new investment opportunities will dwindle and
depletion of older fields will probably exceed growth in output from new
areas.
The recent growth clearly shows the benefit of modern
technology and management methods to boost output from the less mature
regions of West Siberia and offshore. In particular the introduction in
less drilled West Siberian fields of hydraulic fracturing and
directional drilling has already led to substantial increases in
production.
Although, apart from parts of Western and Eastern
Siberia, most of Russia’s onshore oil basins are maturely explored and
developed, the situation is very different offshore and for gas with
prospects existing in the Caspian Sea, in the Arctic, and off Sakhalin
Island.
 Some offshore production already occurs in Russia from
the North Caucasus basin in the Black Sea and from Sakhalin but total
output is expected to grow substantially over coming years. Russian
companies are directing much their attention to offshore opportunities,
sometimes in partnership with foreign investors.
The Russian Caspian Sea: The Caspian Sea is a
giant salt lake and the world’s largest inland body of water. Being
owned jointly by Russia, Azerbaijan, Kazakhstan, Turkmenistan and Iran,
the full development of Caspian Sea resources depends on finalising the
territorial rights of these nations.
Russia’s Caspian Sea is less prospective than Azerbaijan
and Kazakhstan, certainly for oil. However, Lukoil has announced large
volumes although these are probably greatly exaggerated. Lukoil, the
only company to drill in the Russian sector of the Caspian Sea, has been
exploring the Severniy Block since 1999. Exploration wells have
discovered a number of oil, gas and condensate fields, including
Khvalynskaya, Yuri Korchagin (also called Shirotnaya), Sarmatskaya and
Rakushechnaya.
Gas flowed at over a million cubic metres per day at both
Khvalynskaya and Sarmatskaya. Many other prospects have been identified
in a range of water depths up to 500 m. The largest of the newer
structures, Central and Yalama-Samur, lie at over 300 m.
Russia and Kazakhstan agreed to divide part of their
sectors in May 2002 and jointly work on disputed fields, including one
in the Kazakh sector and two in Russia. In Russia Lukoil and Kazmunaigaz
of Kazakhstan will jointly develop the Khvalynskaya and Tsentralnoye
fields.
European Arctic: The Barents Sea lies entirely
within the Arctic Circle west of the Urals Mountains and is owned by
Norway and Russia although the border between the two countries has been
the subject of continual disagreement.
In Russia it includes the waters south of Spitspergen and
Franz Josef Land whilst to the south it covers the offshore extension of
the onshore Timan Pechora basin west of the Urals Mountains – an area
that has been producing oil and gas for many years.
However, despite many discoveries, no offshore production
has yet been achieved from the Barents Sea in either Russia or Norway.
The first offshore oil and gas discovery, drilled from an island, was
Pestchanoosjorsk in 1982.
Subsequently a number of gas and, to a lesser extent, oil
fields were discovered including the giant Shtokmanov gas/condensate
field drilled in 1988 in the South Barents basin and estimated to hold
3,200 Bcm of gas plus liquids. It is the one of the northernmost
discoveries in Russia.
Other smaller finds lie nearer to the coast. The first
offshore development in the region will be the Sevmorneftegas operated
Prirazlomnoye shallow water oil field. The Hutton field in the UK was
abandoned in 2000 and topsides of its TLP have been transported to
Severadovinsk on the White Sea coast to be upgraded and fixed to an
ice-resistant concrete substructure for use on this field. Icebreaking
tankers will be used to transport the oil to shore.
Despite many delays Russia now has plans to develop
Shtokmanov on its own. The project may include an LNG plant, a fleet of
LNG tankers, an offshore platform and an underwater pipeline to shore.
Asian Arctic: The Russian Arctic lands east of the
Urals Mountains border the Kara, Laptev and East Siberian Seas of the
Arctic Ocean and the Bering Sea in the Far East. The coastline runs from
the island of Novaya Zemlya in the west to the border with US Alaska and
then south to the tip of the Kamchatka peninsula.
The basins underlying the Kara Sea lie on trend with the
productive West Siberia basin. Deeply buried non-marine shales are
prolific gas source rocks and the overlying thick Mesozoic and Tertiary
sediments have the potential to hold substantial gas resources.
The giant Russanov field, with possible recoverable
resources of 5 Tcm, lies in 50 m of water but is covered by ice for 10
months of the year. Other discoveries south of Russanov include
Leningrad and Zapodno-Sharapav, both of which are also very large.
Around 70 other discoveries, perhaps totalling 15 Tcm, have been made,
all of which remain undeveloped. Gazprom has plans to drill in the
Obsko-Tazovsky bay in the Kara Sea in a six-year project.
The Laptev and East Siberian Seas overlie a further
series of basins, including the offshore extension of the gas-bearing
Vilyuy basin. They may also be highly prospective for gas however,
unlike those in the Kara Sea, they are hardly explored.
Further east sediments are less prospective owing to the
more limited section and high volcanic content, which reduces reservoir
quality. Small volumes of oil and gas have been found onshore adjacent
to the Bering Sea but the extreme climatic conditions deter companies
from major offshore drilling programmes. Overall recoverable gas
resources in the whole Arctic portion of Asian Russia may be as high as
40 Tcm.
Far Eastern Russia borders the Sea of Okhotsk, in which
lies the only Russian offshore producing region. The Sea of Okhotsk is a
very large offshore area bounded by the Russian mainland in the
northwest, the Kamchatka Peninsula in the northeast and Sakhalin Island
in the south.
Oil has been produced for many years onshore Sakhalin and
offshore agreements are in place with foreign companies developing
several shallow water oil and gas fields on the island’s east coast.
First exploration onshore Sakhalin occurred in the early
1900s and oil was discovered in 1928. Since then many small fields have
been discovered, including 8 larger fields offshore. The area is remote
and harsh with no infrastructure and a fragile environment. Oil has been
produced as part of Sakhalin II from the offshore Molikpaq production
platform in the northeast since 1999.
Sakhalin I: Sakhalin I, signed in 1996, is a
shallow water project (15 m) with reserves of around 2.3 Bn Bbls and 485
Bcm of associated gas. Three offshore fields are being exploited, Chayvo
discovered by Rosneft in 1979, Odoptu (1977), and Arkutun-Dagi (1989).
The project is led by Exxon Neftegaz, in conjunction with SODECO, ONGC
Videsh, Sakhalinmorneftegaz, and RN Astra.
Drilling began in May 2003 and the project’s oil output
is piped westward to the Russian port of De-Kastri and pumped into the
Russian system with the whole project peaking at 250,000 Bbls per day by
2007. Perhaps a third of the oil will ultimately be derived from onshore
operations.
Sakhalin II: The Sakhalin II project, signed in
1994, was being developed by Shell, Mitsubishi, and Mitsui, together
known as Sakhalin Energy until Gazprom took over a 51% interest in late
2006. It includes an LNG plant to be built on the southern tip of the
island, near the town of Prigorodnoye.
The project comprises the development of two fields:
Piltun-Astokhskoye in the NE, primarily an oil field with associated
gas, and Lunskoye in the centre east, predominantly a gas field with
associated condensate and an oil rim. Both fields were discovered in the
1980s and together contain recoverable reserves of over 1 Bn Bbls of oil
and over 500 Bcm of gas.
Phase 1 of the project was focused on oil development and
went into seasonal (180 days) production during the summer of 1999 at
the Vityaz Production Complex. The sea around the complex is ice-covered
for half the year.
The Molikpaq offshore platform is the central feature of
the Vityaz Production Complex. It is a converted drilling rig that was
first used in Arctic waters offshore Canada. In 1998 it was towed from
the Beaufort Sea to Korea where it was upgraded and then towed to Russia
where a steel spacer was fitted so that it could be used in deeper
waters.
The structure was specifically built to operate in severe
ice conditions, 16 km offshore with oil transported to an FSO from where
it is transferred to shuttle tankers. It was installed in September 1998
on the Astokh structure of Piltun-Astokhskoye and began producing at
70,000 Bbls per day (35,000 Bbls per year) in July 1999. It was Russia’s
first offshore oil.
Phase 2 of the project is an integrated oil and gas
development that allows year-round oil and gas production. It involves
an offshore platform on the Piltun feature of the Piltun-Astoskhskoye
field and the installation of a large platform at the Lunskoye gas
field. These platforms, along with Molikpaq, are linked to the shore by
offshore pipelines.
The oil and gas will then be transported via 800 km
onshore pipelines to Prigorodnoye, in the south of Sakhalin Island, the
site of a new LNG plant and oil and LNG export terminals. The fields lie
in an earthquake zone and are subject to pack-ice so considerable
expensive engineering is required. Construction of the LNG project’s
two-train facility began in early 2003.
Other Sakhalin: There is other potential
opportunity for production growth in Sakhalin. Projects numbering from
III to VI have been negotiated at various stages although in June 2004
the results of a 1993 tender for Sakhalin III, awarded to ExxonMobil and
ChevronTexaco, were annulled.
The Sakhalin V project includes the Kaigan-Vasyugan, East
Shmidtovsky, Yelizaveta and Khanguzinsky blocks. In 2004 the operating
company Elvari Neftegaz, comprising BP and Rosneft, drilled the first
exploration well in the Kaigansko-Vasyukansky block at a structure
called Pela Lache under the Sakhalin V project. The well was 49 km from
the coast and in deeper waters (114 m) than any previous well offshore
Sakhalin. It was announced that the well encountered “significant
volumes of oil and gas in a number of high quality sandstone
reservoirs”.
Black Sea/Sea of Azov: The Black Sea is an inland
sea between Europe and Asia connected to the Mediterranean by the
Bosporus and the Sea of Marmara, and to the Sea of Azov by the Kerch
Strait. The Sea of Azov is a northern section of the Black Sea with the
Kerch Strait forming a connection. It separates the Crimea in the west
from the Taman peninsula in the east.
The area has seen some oil and gas production, mostly
from Ukraine although historical volumes are difficult to determine. The
sedimentary area here is part of the North Caucasus basin, known as the
Kerch-Taman sub-basin. In 2003, Russia’s building of a sea dyke from the
South Taman peninsula toward Ukraine’s Tuzla island in the strait
provoked arguments between the two countries. A subsequent accord
allowed for joint use of the strait and called for the delimiting of the
Russian-Ukrainian border. Although some new output may materialise from
the region in Russia most will be allocated to Ukraine.
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