Taymyr Peninsula Shores to be Awash with Oil

Taymyr Peninsula Shores to be Awash with Oil
The Taymyr Peninsula in the Far North of Siberia is turning into a place of a tangible industrial revolution. At least, plans for it that were announced recently look really revolutionary.

Earlier, wek.ru has reported that Taymyr is starting a large-scale development of energy resource deposits. Previously, metallurgy as represented by Nornickel, a Russian nickel and palladium mining and smelting company, had been the major production industry there, but over the last years coalmining, oil and gas companies have been establishing themselves in this Arctic territory. The strategy for development of the Northern Sea Route, which, along with the new cross-country pipelines is increasingly unnerving the “western partners”, is of great help here.

At present, the Russian government is estimating all sorts of configurations of the huge Arctic project. Certainly, officials are thinking about what tax exemptions should be granted. One of the focal points in current discussion is a deduction from the mineral extraction tax for the Vankor Group for 2020-2029. Discussions are also underway of an exclusive zero tax for the production and refining of liquefied natural gas (LNG) and the subsequent output of gas and oil chemistry products. Last but not least some companies domiciled of the Arctic area are likely to enjoy a zero tax for profit over a ten year period on the condition that coordination of the tax rate is delegated to the regional authorities.

A new investment project scheduled to appear in Taymyr is the Sever Bay sea port oil terminal. It will be built on the shore of the Kara Sea’s Yenisei Gulf, 40 km away from the township of Dikson. The construction project has already got approval of public expert scrutiny as regards, environmental impact. It’s being built, in the first place, for transporting oil and gas from the Payakh group of deposits. Commercial operations there began this summer. Reserves of the deposits, which are located some 140 km away from the port of Dudinka on the Yenisei River, make up an estimated 1.2 bln tns of crude oil. Developing Payakh is Neftegasholding company, whose representatives have said full-scale developments of the oilfield will not be possible without assistance from other investors, since production of oil in this area is highly complicated. Experts say the synergy of the Artic cluster will embrace all the significant hydrocarbon deposits on the Russian Arctic coast and continental shelf, as well as new oil pipelines, major transshipment points and the giant Zvezda shipyard in the Far East.

Oil will be shipped to Europe, Asia and the Pacific. “The planned overall volume of shipments is 26.1 mln tns,” said Yuri Yakunin, the director of OOO Taymyrneftegaz-Port. “There is an opportunity to increase it to 50 mln tns. The project has strategic significance for the Russian oil and gas industry and for building up the volume of cargo shipments by the Northern Sea Route. It will kick off development of a new promising cluster of the Taymyr oil and gas province.”

Officials at the Taymyr municipal district of Krasnoyarsk territory say the new terminal will create several thousand jobs on the peninsula alone and, on the scale of the whole country, the number of jobs will reach 60,000.

Development of Payakh deposits presupposes construction of a transport infrastructure, industrial and social facilities inclusive of new housing and public utilities, as well as professional training centers in high Arctic latitudes. The sea terminal that will have a capacity for servicing several large tankers at a time is being designed by Lenmorniiproyekt research institute in Saint-Petersburg. “Plans suggest there will be a field camp for workers, a water intake and a helicopter pad,” said Anna Leshina, an assistant to the Institute’s Chief Engineering Officer. “All the oil transshipment facilities will have the special equipment that fully meets the effective environmental standards and technology regulations and, on top of that, has a capability to prevent negative impact on the environment.”

Yevgeny Vershinin, the head of the Taymyr municipal district told wek.ru earlier the new project will enable the territory to step up its revenues substantially. At present, the consolidated revenue of the district budget exceeds 8 bln rubles, with own revenues standing at 1.2 bln rubles. “The main objective now is to build up the revenues by 50 percent by 2020,” Vershinin said. “We boosted own incomes by 200 mln rubles this year. As for next year, we hope to get a surplus of another 600 mln rubles. We link these estimations to the operations of mineral resource developers. Oil, gas and coal developers who come to Taymyr should have a sense of social responsibility. This concerns infrastructure, engagement in the life of indigenous ethnic groups and creation of jobs for them. At present, we are opening four new special fields of training at the Taymyr College that will be directly linked to oil industry.”

Interestingly, the oil and gas rush has not bypassed Nornickel. World Wide Fund for Nature (WWF) says the company has been considering opportunities for own gas industry projects too. Its plans for building an LNG plant in Dudinka and creating a tanker fleet for it are also on the table. A WWF report published last year said this would be the best possible option from the point of view of uninterrupted output of natural gas and its sales to customers abroad without resorting to Gazprom pipelines. It claimed Nornickel was also considering invitation of a strategic partner from among professionals of the hydrocarbon market. The partner is expected to have gas liquefaction technologies. As the resource base the partners could use Petlyakinskoye gas condensate deposit currently being developed by OAO Taymyrgaz. It is the largest deposit in the Krasnoyarsk territory in terms of the size of ABC1 reserves. The WWF report was devoted to the potential of gas services development in Russia’s Artic areas.