The first page of Russian Federation President Boris Yeltsin’s Decree of November 17, 1992, “On Features of Privatization of State Enterprises, Production Associations, and Scientific Production Associations in the Oil and Refining Industry and Petroleum Products Supply and Conversion of These Entities to Joint-Stock Companies.”
Today, Western Siberia leads the Russian Federation in recoverable reserves of oil and natural gas, providing most of the production of these types of resources. The region produces three-fourths of Russia’s oil and nine-tenths of its natural gas.
The Caspian Pipeline Consortium’s 938 mile trunk pipeline, commissioned in 2001, carries over 33 million tons of oil per year. It is convincing proof of productive international cooperation in providing energy security for Europe.
Since April 2005, LUKOIL–Western Siberia has been producing the Nakhodka Oil and Gas Field in Yamal-Nenets Autonomous District. The field has C1 + C2 gas reserves of over 8.8 TCF and C2 oil reserves of about 9.9 million tons. The peak production volume of 880 BCF of gas and 2.2 million tons of natural gas liquids is to be reached in 2012.
Since July 2008, export shipments of crude oil produced by LUKOIL in the Timan-Pechora Oil and Gas Province have been made continually through the Varandey oil loading terminal with a stationary offshore ice-resistant loading wharf with a carrying capacity of up to 13 million tons of oil per year, located in the Arctic Region on the coast of the Barents Sea.
Opening ceremony of the first LUKOIL gas station in New York City, September 29, 2003. Left to right: LUKOIL President Vagit Alekperov; General Director of LUKOIL Americas Corp. Vadim Gluzman; President of the Russian Federation Vladimir Putin; Senator Charles E. Schumer (NY); and Russian Ambassador Extraordinary and Plenipotentiary to the USA Yuri Ushakov.
One of LUKOIL’s gas stations in New York City.
Opening ceremony of Hauzak Gas Field in the Bukhara Region, Republic of Uzbekistan in November 2007. Left to right: Republic of Uzbekistan Deputy Prime Minister and Minister of Finance Rustam Azimov; Russian Federation First Deputy Prime Minister Sergey Ivanov; LUKOIL President Vagit Alekperov; and Chairman of the Board of Uzbekneftegaz NHC Nurmuhammad Ahmedov. The field’s peak annual production of natural gas, expected in 2012–2013, will be about 388 BCF.
In August 2008, LUKOIL President Vagit Alekperov and ConocoPhillips President Jim Mulva took part in a solemn ceremony to launch South Khylchuyu Field, located in the Nenets Autonomous District and one of the biggest in the northern Timan-Pechora Oil and Gas Province. The field is being developed by Naryanmarneftegaz LLC, a 70:30 joint venture of LUKOIL and ConocoPhillips.
In September 2009, in the town of Krasnaya Polyana (near Sochi, the Krasnodar Territory), LUKOIL opened Russia’s first gas station equipped with an independent power supply based on a photoelectric generator with a peak capacity of 9.6 kW.
In September 2006, LUKOIL commissioned the third stage of an oil distribution and loading terminal on Vysotsky Island in the Baltic Sea. The terminal was built jointly with Fluor Corporation, a leading American engineering company. The terminal’s design capacity is 12.8 million tons a year, and the total capacity of the tank farm is 16 MMCF.
Yury Korchagin Oil Field in the Russian sector of the Caspian Sea is a harbinger of 21st-century big oil in the region.
European parliamentarians visiting an offshore platform at the D-6 Oil Field in the Baltic Sea were satisfied with the results of the use of “zero discharge” technology, which preserves the region’s unique biosphere.
Russian Federation President Dmitry Medvedev discusses the development of the national oil industry with LUKOIL President Vagit Alekperov.
On April 28, 2010, the first oil was produced from Yury Korchagin Oil Field in the Russian sector of the Caspian Sea. Attending the ceremonial opening of the field were, left to right: LUKOIL President Vagit Alekperov; Russian Federation Deputy Prime Minister Igor Sechin; Astrakhan Region Governor Alexander Zhilkin; and Russian Federation Prime Minister Vladimir Putin.
Overview of Major Russian Oil Companies
The natural resources and production, scientific–technical, and human resource potential of the oil sector are Russia’s national property. The efficient use of such resources and potential creates the necessary conditions for sustainable national economic development and ensures growth of the people’s well-being and standard of living. It is an important source of tax and hard-currency revenue for the federal budget. According to data from the Russian Federal Customs Service, the Russian Federation derived $93,486 billion of oil export income in 2009.
The main center of the Russian oil industry is Western Siberia, which houses 53% of the initial total resources. Other major oil and gas regions are the Volga-Urals region (14.2% of initial total resources), the Far East (over 3%), the North Caucasus (1.6%), and in the near future, Eastern Siberia (10.5%) and the Russian continental shelf (12.4%).
The Russian Federation’s production of oil, including gas condensate, was 537.5 million tons in 2008 (99.3% of the 2007 figure), just as the world financial crisis was beginning to expand across the globe. Despite this, however, according to the Federal State Statistical Service, in 2009 the country produced 544.2 million tons of oil, or 1.2% more than in 2008.
As of the end of 2009, the oil sector of the Russian fuel and energy industry included 10 major vertically integrated companies, as well as 160 small and mid-sized oil production companies that together account for about 22 million tons of total Russian oil production. Four Russian regions—the Republic of Tatarstan, the Republic of Komi, the Khanty-Mansi Autonomous District, and the Orenburg Region—are home to 60% of small and mid-sized oil and gas companies. Three-fourths (74.2%) of the oil production volume in this sector comes from three oil regions: the Khanty-Mansi Autonomous District, the Republic of Tatarstan, and the Republic of Komi. Such companies are now developing about a billion tons of recoverable reserves at 250 fields.
These 10 vertically integrated companies account for the bulk (95.9%) of Russian oil production. Among these, the leaders in oil production volume are Rosneft (23.4% of the nation’s total production), LUKOIL (18.5%), TNK-BP Holding Company (14.1%), and Surgutneftegaz (12.7%).
Table 1. Oil Production by Russian Vertically Integrated Companies, 2007–2009, in millions of tons
Source: RF Central Dispatching Administration of the Fuel and Energy Industry [TsDU TEKJ].