Oil and Gas Companies in the Arctic Region are to take into Account Economic Efficiency and Environmental Safety

21 october 2016 | TEK Rossii

TEK Rossii (Russia’s Fuel & Energy Sector) published an article of Mr. Alexander Amiragyan, expert of the Analytical Center, regarding Russian oil and gas projects in the Arctic region. The governmental policy pursued in Russia to develop oil and gas deposits in the Arctic region requires a detailed critical approach that is to include assessment of probable risks for the economy as a whole and take into account alternative development scenarios for the national oil and gas mining industry, including mining of hard-to-recover reserves in traditional regions and development of resources in the Eastern Siberia and Far East-2, the expert believes.

Alexander Amiragyan
Alexander Amiragyan
Department for Fuel and Energy Sector

The role of sea deposits in the global oil and gas industry will grow in the future and active hydrocarbon production will take place not only in warm climate regions (USA, Brazil, Australia, West Africa and Southeast Asia), but also in poleward areas where additional difficulties are caused by low temperatures, ice conditions of mining and transportation, and the need to meet more stringent environmental requirements. Such ‘difficult’ regions include the Russian Arctic.

The governmental program Social and Economic Development of the Arctic Zone of the Russian Federation through 2020 states that oil and gas production will have a high multiplicative effect and favorably influence social and economic development of the region. Besides, the need to increase oil and gas production in the Arctic region (including offshore) to ensure stable operation of the oil and gas industry in the country in the long-term period is spelled out in official power documents. Currently, a number of oil and gas projects are implemented in the Arctic region with the prospect of being launched before 2020 and onshore mining of raw materials and their transportation across Arctic seas. For example, Yamal LNG and Novyi Port Oil Deposit, where the infrastructure for preparation and transportation of raw materials is almost ready, can ultimately produce up to 5-6 mln tons of oil and 16.5 mln tons of LNG (or mining around 23-24 bln cub. m of gas).

To develop oil and gas resources in the Arctic shelf area of Russia, it is required to ensure that two key conditions are met: economic efficiency and environmental safety. Economic efficiency means achieving required level of oil and gas production profitability and environmental safety provides for applying advanced technologies in mining, storage and transportation of raw materials. Both factors are interrelated and finally strict environmental requirements cause higher costs of Arctic projects, considers Mr. Amiragyan.

However, large-scale oil and natural gas production in the Arctic shelf area of Russia is not planned in the long-term up to 2030-2035, the expert writes. Subject to long-term forecasts of the domestic and foreign demand for oil and gas and taking into consideration their available reserves and plans to mine in continental regions of Russia, it seems that there will be no need for large-scale hydrocarbon production in the Arctic shelf area of Russia until 2035, he believes.

Please see details in TEK Rossii.