Without a doubt, further research in the Arctic will be an important part of the country’s program for industrial development of the oil and gas resources of Russia’s offshore shelf. During the first high-latitude deep-water expedition in Russian history, in August 2007, a large volume of scientific research was performed within the scope of the Third International Polar Year, and the Mir deep-submergence vehicles submerged at the North Pole for the first time. Over 15 days, the Rosgidromet [Federal Service for Hydrometeorology and Environmental Monitoring] research vessel Akademik Fëdorov [“Academician Fëdorov”] and the Murmansk Marine Shipping Line’s nuclear icebreaker Rossiya [“Russia”] overcame nearly 2,500 miles of ice in the world’s harshest and coldest ocean. During the Arctic 2007 expedition, water, ice, and soil samples were collected in the most scientifically interesting parts of the ocean, over the Lomonosov and Gakkel Ridges and even at the North Pole, which the Akademik Fëdorov and Rossiya reached on August 1. On August 2, the Mir 1 and Mir 2 deep-submergence vehicles worked for almost 10 hours in the ocean depths at the point where the Earth’s meridians converge, completing a dive to a depth of about 14,000 feet. A Russian flag made of superstrong metal was planted on the bottom, and a time capsule, the flag of the Third International Polar Year, and a memorial medal were emplaced as well. To a certain extent, the results of the Russian polar expedition to the North Pole should form the foundation for a Russian position when the nationality of this part of the shelf is decided upon by the United Nations.
Surprisingly, several countries of the Arctic region, including Canada, have reacted completely inappropriately to the planting of the Russian flag on the sea floor. In this author’s opinion, there should be no grounds for any worry or alarm here. Recall that in 1969, American astronauts planted a flag on the moon, but it is commonly understood that Earth’s satellite has not become the property of the US. Moreover, our government has repeatedly stressed that Russia will act in the Arctic only within specific international procedures and through the UN, and will strictly abide by accepted international norms.
A further illustration of the Russian government’s constructive position is its approval, on June 16, 2010, of the Russian Geologic Strategy through 2030. Within that framework, the state of knowledge of the continental shelf and inland seas is forecast to grow by nearly double by 2030. (As of today, the shelf is about 42% explored; this figure could grow to 44% by 2012, to 60% by 2020, and to 80% by 2030.) Such progress is made possible by the more rapid introduction of innovative oil exploration and production technologies. The Russian state is prepared to allocate its own money to develop innovative projects, to introduce lease financing of similar initiatives, to offer state guarantees to private investors who make loans for innovative projects, and to subsidize interest rates on commercial bank loans. Financial incentives are also planned using tax benefits for enterprises engaged in innovative activities, and reduced customs duties will be levied on geologic exploration equipment that is unlike any manufactured in Russia. In addition, the Ministry of Natural Resources and Ecology intends to propose steps as early as 2011 to ensure market turnover of mineral prospecting and assessment licenses.
Using the Potential of High Oil and Gas Technologies
The foreign trade press commonly makes rather dubious assessments regarding the low technical and technological level of Russia’s oil and gas industry. Sometimes it is even asserted that Russian service companies in the oil and gas industry lag so far behind Western corporations that they will not be able to catch up in the foreseeable future.
On May 20, 2008, at the Standartneftegaz-2008 conference in Moscow on the standardization of oil and gas equipment, Russian oil and gas workers discussed in detail the problem of preparing industry standards. The conference was held to address the urgent need to improve obsolete Russian oil and gas equipment standards and to harmonize them with international standards. The conference examined questions of ensuring equipment safety, which goes a long way toward determining work safety in the entire oil and gas industry. The conference was attended by oil and gas equipment developers, manufacturers, and consumers, as well as by government agencies. A serious positive occurrence noted by participants was the fact that the Russian Federal Agency for Technical Regulation and Metrology [Rostekhregulirovaniye] had completed organizing a Technical Committee on Oil and Gas Industry Standardization. The technical committee’s primary task is to write new standards in the interests of the industry and to harmonize them with international standards. The Technical Committee on Oil and Gas Industry Standardization is headed by Vlada Rusakova, member of the executive board of Gazprom. Gazprom was responsible for the work of three subcommittees; Rosneft, for that of the subcommittee on oil production. The subcommittee on the development of offshore fields was the responsibility of LUKOIL, and the subcommittee on equipment and materials was the responsibility of the Russian Association of Oil and Gas Equipment Manufacturers. On the whole, the Standartneftegaz-2008 conference was an important step and proposed a set of measures to the government to raise the competitiveness of Russian industrial products for the oil and gas industry.
In turn, the first international forum on “Oil and Gas Service and Equipment: Russian Experience and International Cooperation,” which took place in late May 2008 in Tyumen, convincingly showed that the so-called technical and technological backwardness of Russian oil service companies is steadily becoming a thing of the past. While it is true that certain high-tech foreign service companies such as Baker Hughes, Halliburton, Schlumberger, etc., have patents on very efficient technologies that Russian companies do not have, the well-known analytic research company Douglas-Westwood estimates the size of Russia’s oil service market in 2007 to have been $12.5 billion, which will increase to $22 billion by 2011, i.e., the market will almost double in three years. Experts estimate that the biggest growth here will be in drilling. Currently, the annual volume of drilling work approaches 32.8 million feet per year, and by 2010 it will exceed 49 million feet. A challenging mining geology makes the current cost of drilling $125 per foot in Western Siberia and $610 in Eastern Siberia. By 2011, the cost of drilling is expected to exceed $150 per foot in Western Siberia and to reach $915 in Eastern Siberia.
Under such conditions, the obvious striving of Western service companies to expand their activity in Russia is readily apparent. For example, in early November 2007, Halliburton Co. closed a deal to acquire the leading Russian drilling company Burservis (Burservice). Simon Turton, Halliburton Country Vice President for Russia, remarked: “Over the past several years, Halliburton has successfully expanded our directional drilling and mud-logging operations in Western Siberia. This acquisition enables Halliburton to expand our operations to serve oil and gas customers in... Russia, thanks to Burservice’s outstanding reputation for service quality.”7