Igor Feodorov, Governor of Nenets autonomous region: “Having to overtake arrears”

Nenets autonomous region is taking more significance in view of intensified navigation along the Northern Sea Route and Arctic development. Igor Feodorov, Governor of Nenets autonomous region, tells in his interview to PortNews IAA about the region’s infrastructure projects – Pechora LNG, prospects of Varandey terminal and Narjan-Mar port, revival of Amderma settlement as well as other projects.

- Mr. Feodorov, what are the plans for the development of Narjan-Mar port and what made you ask for halting the process of its privatization?

- These questions are closely related in fact. The administration of the Nenets autonomous region has initiated the halt of the port privatization to make the implementation of the port development plans possible. 

The previous year the Federal Property Management Agency (FPMA) initiated the bidding process in respect of Narjan-Mar port and other port complexes of Russia under the program of state assets privatization. The port of Narjan-Mar is a complex of port facilities in the delta of Pechora river some 100 km from the Arctic ocean. During the navigation period it accepts cargoes arriving by sea mainly from Archangelsk and by river from Komi Republic for construction and supply of the entire region - fuel, equipment, materials for oil fields, nondeteriorating supplies for the region’s stores. It should be noted that transshipment volumes continue to grow – both residential and social construction is underway, new oil fields are developing, rescue center is being build by the Ministry of Emergency Situations, modernization of the energy system is in the process – hence the turnover is increasing. In 2012 the port got out of debts and the issue of the port’s bankruptcy has been removed from the agenda though it seemed to be impossible some years ago. 

In the current situation there is no need to sell the port, we think. Moreover, the port plays an important strategic role while private ownership would challenge stable supply of a huge and strategically important territory of Russia’s Arctic zone. Business laws are weak beyond the Arctic Circle. That is why we support stable supply of products to the region’s population from the budget resources. That is why I asked the PM Dmitry Medvedev to halt the procedure of the port privatization. The Nenets region is ready to make the port a regional company if FPMA as the owner transfers the port’s shares to the ownership of the region. On the one hand it is a burden for the budget, but on the other hand it will enable us to ensure stable operation of the port.

- How possible is the location of a rescue center and a Northern Sea Route’s navigation support base in Amderma?

- There are two reasons for foundation of a rescue center in Amderma: a geographical and a strategic one. In the western part of the Arctic there is no other place to be more convenient for a location of rapid reaction rescue force to operate at the Northern Sea Route from Murmansk to Novaya Zemlya and in the Kara Sea, for emergent assistance of distressed vessels and ships, tankers and oil workers employed for operation in the shelf area of the Pechora Sea and eventually in the Kara Sea. A glance on the map is enough to realize that...

The settlement of Amderma located much northwards from Murmansk is an extensively capable airport complex inherited from Air Defense able to accept any types of airplanes even today. It is also a hydrometeorology and an in-house sea port, though a small one. It is a small settlement at the Kara gates, the narrowest place of the Northern Sea Route. There is a deepwater Morozov Bay there being used as anchorage during stormy weather. So Amderma is a strategically important place in the Arctic map. Even Narjan-Mar where rescue center is being built at full speed by the Ministry of Emergency Situations does not perfectly correspond to this role.

The Nenets autonomous region is quite active in pursuing the policy of Amderma revival. It took some time to gain support of the federal center. As a consequence, the year of 2012 saw the former military aerodrome obtain the status of a federal state-owned enterprise and the results of the past year exceed those of the previous 15 years! We carry out a methodical work on attraction of federal finances for scrap management in Amderma as well as for the port modernization. On our part we made considerable efforts for modernization of public services in Amderma. The place has fine perspectives.

- Tell about Pechora LNG project, please – what is its current implementation stage and what are the following steps?

- Preinvestment studies of the past year suggested that production, liquefaction and transportation of the natural gas from the Nenets autonomous region with further export by gas carriers are technically feasible. Experts of OJSC Giprospetsgaz considered and analyzed 12 variants of the project implementation. In the result the project has been acknowledged to be technically feasible, economically efficient and commercially attractive in all considered variants. It implies the construction of a plant for liquefaction of natural gas which is not only to be exported but, what is most significant for us, used for gasification of the region’s population centers with a creation of new work places besides.  

In December 2012, my report on prospects of Pechora LNG project presented at an extended meeting of the Coordination Council of the Russian Union of Industrialists and Entrepreneurs in the Northwest Federal District aroused much interest. Nikolai Vinnichenko, Presidential Plenipotentiary in the Northwest Federal District, supported our initiative and suggested holding the project presentation at the office of the Presidential Plenipotentiary. 

Our work in this direction closely correlates with the tasks set by the nation’s leaders. When speaking about attracting of investment to the regions at the meeting held by the state council in December 2012, the President said the functions of the regional authorities include attraction of investors. Actually the administration of the Nenets autonomous region started this work four years ago and we have just seen the first results. However we understand a lot to be done for implementation of this project the scale of which is far beyond our region. According to ALLTECH Group the plant is to be put into operation by the end of 2018. Private investment into the project implementation is to total $12 bln.

- How tangible for the region will be the taxes from offshore ice-resistant fixed platform Prirazlomnaya? 

- Startup-setup operations are currently under way at the platform. Oil production is to begin in 2013. With its commissioning the property tax will start coming to the regional budget as the platform is registered in the port of Narjan-Mar since April 2012. 

The estimated taxes will enable the region to properly support the social security system and solve the issues of the region’s infrastructure development. The tax amount is to be considerable.

- Do you expect an increase of oil transshipment via Varandei terminal? 

- One-of-a-kind Varandey Terminal was put into operation in 2008. It is designed to handle 12.5 mln tons oil per year. In 2008, crude shipments through the terminal totaled 1.7 mln tons, in 2009 - 7.5 mln tons, in 2010 - 7.4 mln tons, in 2011– 4 mln tons with a decrease caused by a steep fall in production at South-Khylchuyu field. 

In 2012 Oil Company LUKOIL built an oil pipeline from Kharyaginsk to South-Khylchuyu field with annual capacity of 4 mln tons of oil. When put into operation the pipeline will enable the loading of Varandei terminal to boost with oil coming from the fields being developed by LUKOIL: Kharyaginsk, Inzyreisk and eventually Yuri Rossikhin field as well as other fields located in the area of LUKOIL operations. Besides, in 2013 JSOC Bashneft plans to start a test operation at Roman Trebs field located eastwards from Varandei (with production of 300,000 tons). The company also plans to use the facilities of the Varandei terminal. In the future, other oil companies will probably use the terminal in their transportation chain which may considerably increase the load of the northern way. However, it depends on tariff policy of the terminal owners and Transneft as well as on agreements between the companies engaged in oil production in the Nenets autonomous region. The terminal is technically capable of increasing its throughput capacity to 25 mln tons of oil per year.

- What are the plans of the Nenets regional administration on the development of the region’s transport infrastructure?

- It is, perhaps, the most critical issue for the Nenets autonomous region today as the only way to leave its territory is by plain. Currently, we have to overtake arrears and invest immense resources into the infrastructure development. We have considerably advanced in solving the issue of completing the road between Narjan-Mar and Usinsk. Over RUR 20 bln were invested into its construction during all the past years. In view of an exclusive social significance of the region’s link with the federal network of automobile roads and the project having undergone a State examination I suggested the Chairman of Russian Government Dmitri Medvedev to entrust the Ministry of Transport with redistributing allocations of the Federal Road Fund for completion of Narjan-Mar – Usinsk highway.  It requires RUR 6.7 bln. I have discussed the prospects of the highway completion at the meeting with the presidential advisor Igor Levitin, who supported our proposals. 

Having signed and Additional Agreement with the Archangelsk region, the Nenets autonomous region gained the right to build not only Narjan-Mar – Usinsk highway but Narjan-Mar – Telviska and Nes-Mezen highways to link the western part of the Nenets autonomous region with the Archangelsk region. Our colleagues in the Komi Republic carry out active road construction in the near-border Ust-Tsylemsk district. 

As for the further prospects, there is a priority project on construction of a railway line linking Vorkuta and Amderma via Ust-Kara. The project seems to be promising in view of activated navigation along the Northern Sea Route and development of new fields on the shelf of the Pechora and Kara Seas. One more line, Sosnogorsk-Indiga is associated with the development of gas condensate fields in the region. 

However, it is early to speak about the terms of implementation and estimated cost of such large-scale project.

Interviewed by Vitali Chernov