The Future of Russia’s Offshore Oil and Gas Industry

The Future of Russia’s Offshore Oil and Gas Industry goes behind the headlines and surface analysis to present exactly what is being planned and where opportunities exist for foreign business.

The key issues that The Future of Russia’s Offshore Oil and Gas Industry addresses are:

• What is known about the geology and resource base of the Russian offshore: how well has it been explored and what are the reserve data and estimates for each of Russia’s seven seas?
• What is the status and development plans for each particular important offshore project
• Does the current legislative and regulatory framework support or hamper investment into offshore projects? What are the expected developments?
• How big is the challenge related to technological and technical expertise and capability faced by the Russian companies in developing offshore projects? What is the demand for main types of infrastructure, equipment and vessels? Where are the critical shortages and how could they affect development of particular projects?
• What are the markets for oil and gas production from the offshore projects in the different seas?

The Future of Russia’s Offshore Oil and Gas Industry is a source of indispensable data for:

• oil and gas operators
• engineering and construction contractors
• oilfield service providers
• equipment and materials manufacturers
• shipping and transportation companies
• banks and financial institutions
• government and trade organizations

EXECUTIVE SUMMARY

 
1. THE IMPORTANCE OF THE CONTINENTAL SHELF IN AUGMENTING RUSSIA'S
HYDROCARBON RESOURCES

OVERVIEW
1.1 Energy Strategy of the Russian Federation Necessitates Developing Russia's Continental Shelf
1.2 Offshore Potential
1.3 Strategy for Developing the Shelf
     1.3.1 State strategy for exploring and developing the oil and gas potential of the continental shelf
     1.3.2 Strategies of oil and gas companies

 
2. THE BUSINESS ENVIRONMENT FOR PROJECTS ON RUSSIA'S CONTINENTAL SHELF
OVERVIEW
2.1 Economic Prerequisites to Developing Oil and Gas Resources of the Continental Shelf of the Russian Federation
2.2 Competitiveness of Offshore Projects
     2.2.1 Prospects for commercial discoveries
     2.2.2 Operating and capital costs
2.3 Markets for Russian Hydrocarbons
2.4 Statutory Regulation of Offshore Field Development
     2.4.1 Offshore subsoil use
     2.4.2 Procedures for general licensing
     2.4.3 Procedures for production sharing agreements
2.5 Fiscal regime
2.6 Government Support for Construction and Exploitation of Offshore and Related Facilities

 
3. CHARACTERISTICS OF RUSSIA'S CONTINENTAL SHELF

OVERVIEW
3.1 Geography, Natural and Climatic Conditions of the Russian Continental Shelf
3.2 Hydrocarbon Resource Base
     3.2.1 Geological zoning of the shelf and the extent of study
     3.2.2 Hydrocarbon reserves and resources
3.3 Priorities for Geological Study, 2006-2020
     3.3.1 Shelves of the northern seas
     3.3.2 Shelves of the Far East seas
     3.3.3 Shelves of the southern seas
3.4 Offshore Subsoil Use Licensing
     3.4.1 Licensing today
     3.4.2 Priorities in licensing activities through 2020
 
4. CURRENT EXPLORATION AND PRODUCTION PROJECTS
OVERVIEW
4.1 Sea of Okhotsk
     4.1.1 Odoptu-more (northern dome) field
     4.1.2 Sakhalin-1
     4.1.3 Sakhalin-2
4.2 The Barents Sea
     4.2.1 Prirazlomnoye Field
4.3 The Baltic Sea
    4.3.1 Kravtsovskoe Field (D-6)

 
5. PROMISING EXPLORATION AND PRODUCTION PROJECTS
OVERVIEW
5.1 Sea of Okhotsk
     5.1.1 Sakhalin-3
     5.1.2 Sakhalin-4
     5.1.3 Sakhalin-5
     5.1.4 Sakhalin-6
     5.1.5 Sakhalin-7
     5.1.6 Magadan-1, -2, -3, -4
     5.1.7 Zapadno-Kamchatsky block
     5.1.8 Khabarovsk-1, -3
5.2 Sea of Japan
     5.2.1 Sakhalin-8,-9
     5.2.2 Khabarovsk-2, -4
5.3 Bering Sea
     5.3.1 Anadyr-1
     5.3.2 Anadyr-2, -3
5.4 Kara Sea
     5.4.1 Western shelf of the Yamal Peninsula
     5.4.2 Ob and Taz bays
5.5 Barents Sea
     5.5.1 Shtokmanovskoye field
     5.5.2 Barents-1
     5.5.3 Barents-2
     5.5.4 Barents-3
     5.5.5 Barents-4
     5.5.6 Barents-5
     5.5.7 Barents-6
     5.5.8 Barents-7
5.6 Black Sea
     5.6.1 Tuapse trough
     5.6.2 Shatsky ridge
5.7 Sea of Azov
     5.7.1 Temryuksko-Akhtarsky block
5.8 Caspian Sea
     5.8.1 Severny block
     5.8.2 Tsentralny Block
     5.8.3 Yalamo-Samursky block 
     5.8.4 Severo-Kaspiysky block
     5.8.5 Kurmangazy structure
     5.8.6 Inchkhe-more field
     5.8.7 Derbentsky and Dimitrovsky blocks
     5.8.8 Izberbashsky and Sulaksky blocks
     5.8.9 Shelf of the Republic of Kalmykia

 
6. LNG PROJECTS ON RUSSIA'S CONTINENTAL SHELF
6.1 Liquefied Natural Gas around the World
6.2 Likely Niches for Russia in LNG Sales
6.3 Onshore and Offshore LNG Plant Projects
     6.3.1 LNG production within the Sakhalin-2 project
     6.3.2 LNG production within the Shtokmanovskoye project
     6.3.3 LNG plant projects onshore

 
7. EQUIPMENT AND TECHNOLOGY FOR RUSSIA'S OFFSHORE FIELDS
OVERVIEW
7.1 Essential Equipment and Technology for Exploring and Developing Russia’s  Continental Shelf
     7.1.1 Pressing technical and technological issues
     7.1.2 Geophysical surveying and exploration
     7.1.3 Drilling wells
     7.1.4 Outfitting offshore fields
     7.1.5 Transporting oil and gas
     7.1.6 Assessing demand for drilling rigs and production platforms
7.2 Russian Market for Offshore Drilling Rigs and Production Platforms
     7.2.1 Historical overview
     7.2.2 Offshore drilling rigs and production platforms
     7.2.3 Russian producers of offshore units

 
AFTERWORD

 
Appendix 1

 
Appendix 2

 
Appendix 3

Figure 1.1. Distribution of oil resources by onshore and offshore regions of Russia
Figure 1.2. Oil production forecast through 2020
Figure 1.3. Gas production forecast through 2020
Figure 2.1. Potential markets for Russian offshore hydrocarbons
Figure 2.2. Competitors to Russia's offshore hydrocarbons by potential markets
Figure 3.1. Seismic exploration maturity of the Russian continental shelf
Figure 6.1. Potential LNG transportation routes from Russia

Table 1.1 Moderate and (optimistic) forecasts for liquid hydrocarbon production in Russia through 2030
Table 1.2 Factors influencing technical accessibility of hydrocarbon resources in offshore Russia
Table 1.3 Distribution of oil resources in offshore Russia by technical accessibility and forecasted profitability (million tons)
Table 1.4 Distribution of free gas resources in offshore Russia by technical accessibility and forecasted profitability (billion cubic meters)
Table 2.1 Commercial success indices for offshore areas of selected countries, 1991 through 2000
Table 2.2 Average size of discoveries at commercial fields, 1991-2000
Table 2.3 Country ranking by anticipated size of reserves, 2000
Table 2.4 Costs to discover and develop a field by country
Table 2.5 Anticipated per unit cost for geological exploration by country
Table 2.6 Centers of growth in demand for hydrocarbons
Table 2.7 Coefficients for calculating differentiated rates for the mineral extraction tax
Table 3.1 Surface areas of Russia's seasTable 3.2 Shallow water areas of Russian seas, thou. sq km
Table 3.3 Extent of geological exploration in Russia's offshore as of January 1, 2005
Table 3.4 Characteristics of offshore fields in the Sea of Okhotsk
Table 3.5 Characteristics of offshore fields in the Barents Sea (including the Pechora Sea)

Table 3.6 Recoverable initial combined hydrocarbon resources in Russian marine territories as of the beginning of 2005
Table 3.7 Distribution of initial combined hydrocarbon resources at various depths in the Sea of Okhotsk
Table 3.8 Recoverable reserves at fields on the shelf of the Sea of Okhotsk as of the beginning of 2005
Table 3.9. Forecast of fields on the shelf of the Sea of Okhotsk containing recoverable reserves exceeding 10 million tons of oil equivalent
Table 3.10 Distribution of initial combined hydrocarbon resources at various depths in the Russian sector of the Bering Sea
Table 3.11 Distribution of initial combined hydrocarbon resources at various depths in the Russian sector of the Chukchi Sea
Table 3.12 Distribution of initial combined hydrocarbon resources at various depths in the Russian sector of the East Siberian Sea
Table 3.13 Distribution of initial combined hydrocarbon resources at various depths in the Russian sector of the Laptev Sea
Table 3.14 Distribution of initial combined hydrocarbon resources at various depths in the Russian sector of the Kara Sea
Table 3.15 Recoverable reserves of major fields on the shelf of the Kara Sea as of the beginning of 2005
Table 3.16 Distribution of initial combined hydrocarbon resources at various depths in the Russian sector of the Barents Sea
Table 3.17 Recoverable reserves of major fields on the shelf of the Russian sector of the Barents Sea as of the beginning of 2005
Table 3.18 Distribution of initial combined hydrocarbon resources at various depths in the Russian sector of the Black Sea
Table 3.19 Distribution of initial combined hydrocarbon resources at various depths in the Russian sector of the Caspian Sea
Table 3.20 Recoverable reserves of major fields on the shelf of the Russian sector of the Caspian Sea as of the beginning of 2005
Table 3.21 Current licenses for shelf operations in the Barents and Kara seas
Table 3.22 Current licenses for shelf operations in the Far East seas
Table 3.23 Current licenses for shelf operations in the Sea of Azov and the Black and Caspian seas
Table 3.24 Characteristics of subsoil areas licensed on the Russian continental shelf as of July 1, 2005
Table 3.25 Required 2D offshore seismic surveys
Table 3.26 Blocks proposed for licensing on the shelf of the Barents Sea through 2010
Table 3.27 Blocks proposed for licensing on the shelves of the Far East seas through 2010
Table 3.28 Offshore blocks offered for geological study
Table 4.1 Oil production on the Russian shelf, thous. tons
Table 4.2 Capital investments in projects on the Russian shelf
Table 4.3 Oil production on the shelf of Sakhalin Island, thous. tons
Table 4.4 Recoverable reserves of the Sakhalin-1 project as of the beginning of 2005
Table 5.1 Shelf areas scheduled for allotment in 2006
Table 5.2 Forecast of oil and gas production in the Sea of Okhotsk, 2010-2020
Table 5.3 Structures of the Sakhalin-3, -4, -5, -6 projects with forecasted IRR > 20 percent
Table 5.4 Structures of the Sakhalin-3 project (Sea of Okhotsk) with forecasted
IRR > 20 percent
Table 5.5 Structures of the Sakhalin-4 project (Sea of Okhotsk) with forecasted IRR > 20 percent
Table 5.6 Structures of the Sakhalin-5 project (Sea of Okhotsk) with forecasted IRR > 20 percent
Table 5.7 Structures of the Sakhalin-6 project (Sea of Okhotsk) with forecasted IRR > 20 percent
Table 5.8 Forecast of oil and gas production in the Kara Sea, 2010-2020
Table 5.9 Forecast of oil and gas production in the Barents Sea, 2010-2020
Table 5.10 Forecast of oil and gas production in the Russian sector of the Caspian Sea, 2010-2020
Table 6.1 Increases in LNG imports, 1965-2004, bcm
Table 7.1 Equipment and technology for exploring and developing Russia's offshore
Table 7.2 Russian offshore productions units
Table 7.3 Demand for production platforms for offshore projects through 2030
Table 7.4 Demand for tankers for offshore projects through 2030
Table 7.5 Demand for vessels to support oil and gas production in the Sea of Okhotsk through 2030
Table 7.6 Demand for LNG plants and loading terminals in the Barents Sea and Sea of Okhotsk through 2030
Table 7.7 Demand for vessels to transport LNG in the Barents Sea and Sea of Okhotsk, units
Table 7.8 Construction-modernization of offshore equipment at Russian facilities, 1997-2008
Table 7.9 Distribution of the Soviet drilling fleet (excluding Russia) today
Table 7.10 Russia's offshore drilling and production fleet, as of mid-2006
Table 7.11 Equipment manufactured by Uralmash-Burovoye Oborudovaniye (Integra)
Table 7.12 Equipment manufactured by Uralmash-Burovoye Oborudovaniye for semisubmersible drilling platforms (Integra)

Map 3.1. Seas adjacent to the Russian Federation
Map 3.2. Primary oil and gas bearing provinces and basins of the Russian shelf
Map 3.3. Fields and prospective structures of the Sakhalin shelf (the Seas of Okhotsk and Japan)
Map 3.4. Fields and prospective structures in the Russian sector of the Barents Sea shelf
Map 3.5. Fields and prospective structures in the Russian sector of the Baltic Sea shelf
Map 3.6. Fields and prospective structures in the Russian sector of the Caspian Sea shelf
Map 3.7. Geological activities on the shelves of the Barents and Kara seas
Map 3.8. Geological activities on the shelf of the Laptev Sea
Map 3.9. Geological activities on the shelf of the Bering Sea
Map 3.10. Geological activities on the shelves of the southern seas
Map 3.11. Subsoil use licensing on the shelves of the Barents and Kara seas
Map 3.12. Subsoil use licensing on the shelf of the Far East seas
Map 3.13. Subsoil use licensing on the shelves of the Black and Caspian seas and the Sea of Azov
Map 3.14. License blocks in the Barents Sea
Map 3.15. License blocks in the Sea of Okhotsk
Map 4.1. Odoptu-more (northern dome) field, Sakhalin-1, -2 projects (Sea of Okhotsk)
Map 4.2. Sakhalin-1 project, phase-1 field construction objects (Sea of Okhotsk)
Map 4.3. Transportation infrastructure for Sakhalin-1 projects (Sea of Okhotsk)
Map 4.4. Sakhalin-2 project elements and transportation infrastructure (Sea of Okhotsk)
Map 4.5. Prirazlomnoye project elements and transportation infrastructure (Barents Sea)
Map 4.6. Kravtsovskoe project elements and transportation infrastructure (Baltic Sea)
Мар 5.1. Prospective projects on the shelves of the Seas of Okhotsk and Japan
Map 5.2. Sakhalin-3, -4, -5 projects (Sea of Okhotsk)
Map 5.3. Sakhalin-6, -7, -8, -9 projects (Sea of Okhotsk and Sea of Japan)
Map 5.4. Magadan-1, -2, -3, -4 projects (Sea of Okhotsk)
Map 5.5. Zapadno-Kamchatsky project (Sea of Okhotsk)
Map 5.6. Anadyr-1, -2, -3 projects (Bering Sea)
Map 5.7. Western shelf of the Yamal Peninsula (Kara Sea)
Map 5.8. Fields of the Ob and Taz bays (Kara Sea)
Map 5.9. Field infrastructure and transportation plan for developing the Shtokmanovskoye field (Barents Sea)
Map 5.10. Barents-1, -2, -3, -4 and -5 projects (Barents Sea)
Map 5.11. Projects on the shelf of the Black Sea
Map 5.12. Projects on the shelf in the Russian sector of the Caspian Sea
Map 6.1. Options for LNG plants on the Yamal Peninsula
Map 7.1. Main shipyards serving the offshore industry