Relevant topics

2015 April 10

Sub-frozen logistics

The decline of oil prices has a ‘freezing’ impact on Arctic development projects. Nevertheless, with support bases established in the northern regions and phasing out of imports in construction of supply vessels, the economy of many offshore projects would be viable even in current situation.

Expensive shelf

Development of transport-logistic infrastructure of Russia’s Northern regions depends directly on the development of offshore oil & gas fields. Amid the plunging oil prices the companies have to be more careful about their abilities and investments. 

According to Aleksei Fadeyev, head of Production Support Department at Gazprom Neft – Sakhalin LLC, who spoke at the 5th International Conference “Arctic Logistics” held in Murmansk on April 8, 2015, major challenges of Russia’s offshore project are not only oil prices but also the demanding schedule (weather window), enforcement of legislative initiatives, opening of state border checkpoints, absence of adequately developed supply bases in the Arctic zone of Russia, remoteness of supporting infrastructure, critical shortage of technologies and production facilities in Russia, monopolization of supply and service markets.

Over 30% of costs for drilling of one offshore well fall on supply vessels. They, together with offshore aircrafts and oil spill response equipment are required at the majority of project phases.

Meanwhile, both Russia and the international market lack ice class supply vessels. Aleksei Fadeyev says that Russian ship owners control 35 supply vessels including only 20 vessels with characteristics required for operation in severe ice conditions (at least DNV Ice 1C). With the current construction rates, their number is forecasted to increase to 70 units by 2030. All supply vessels flying the flag of Russia are involved in current projects under long-term contracts.

The international market numbers 1,371 supply vessels including 48 ships with ice class not below DNV Ice 1C, only 5 of them are not deployed (according to Fearnley Offshore Supply AS as of March 2015).  

Representative of Gazprom Neft – Sakhalin says the potential of the ma of components in Russia allows for implementation of the programme on phasing out of imports in construction of supply vessels. There are domestic manufacturers of diesel engines, propulsors, tanks, compressors, pumps, heat-exchange units, water preparation equipment, cranes and deck equipment, navigation systems, electric equipment, thrusters, tank measuring systems.

It should be reminded that the state plans to secure the transfer of a portion of the Russian cargo base to ships flying the Russian flag. The shipyard being built in Bolshoy Kamen (Primorsk Territory) has been handed over to the consortium of investors including largest customers ordering Arctic vessels and facilities. 

According to Aleksei Fadeyev, additional amendments should be introduced into the legislation for simplification of certain procedures like those related to transportation of radiation sources by vessels flying foreign flags to artificial islands and structures located at the continental shelf of Russia and back.

In the sphere of customs administration, representatives of extracting companies ask for a prescribed procedure for application of special customs procedures to foreign goods intended for the development of hydrocarbon resources on the continental shelf and for securing of simplified procedure for exportation of goods from RF territory to the ships involved in implementation of offshore projects.

Murmansk hub for offshore projects

Apart from supply vessels, profitability of offshore projects depends on availability of adequately developed onshore bases of supply. There are no such bases in the Northern region of Russia today. 

Oil & gas companies like Rosneft and Gazprom consider Murmansk as a place for location of their onshore infrastructure as there is a non-freezing port and production facilities there. 

Karmorneftegaz LLC (JV of Rosneft and ExxonMobil) is building an onshore base on the left shore of the Kola Bay to support the drilling operations at the licensed block Vostochno-Prinovozemelsky-1».

On the right shore, there are bases for the support of drilling operations at the Dolginskoye field of Gazprom Neft – Sakhalin and a support base for Gazprom’s Prirazlomnoye field.

According to Dmitry Sosnin, Minister of Transport and Road Facilities of the Murmansk Region, who spoke at the “Arctic Logistics” Forum, the promising areas for the construction of support bases are Belokamenka, 82nd Shipyard, Oil Terminal Lavna and, in the future, the container terminal. The above facilities will have sufficient depth.

Belokamenka (left shore of the Kola Bay) has two plots of land with the area of 48.5 hectares. The depth of its water area is 12 - 40 m, depth at the berths - 5-10 m. “Many companies are interested in Belokamenka. They are looking into a possibility to use those plots of land for their purposes including for their offshore fields”, Dmitry Sosnin said.

As for the 82nd Shipyard, the territory was purchased by Rosneft in order to build a support base for its offshore projects. Total area is 82.8 hectares, water area depth 40-70 m, depth at the berths– 12-18 m, waterfront - 330 m.

The site for Rosneft’s oil terminal covers the area of 178.3 hectares, water area depth - 12-20 m, depth at the berths - 8-12 m.

It should be also noted that transshipment complex Belokamenka has ceased operation but Dmitry Sosnin says that new off-harbour complexes can start operation in 2015. As IAA PortNews learnt from a source in the regional government, it is about the storage tanker of Gazprom Neft.

As for container terminal which is to be located on the right (eastern) shore of the Kola Bay, it is a long-run prospect. Its design container throughput is 300,000 TEUs per year.

According to experts questioned by IAA PortNews, well developed onshore support bases and logistic infrastructure will considerably decrease the costs of offshore projects and will ensure profitability of many of them even with the current oil prices. Oil & gas companies which pull back the development of their Arctic projects go on with their preparatory activities as it is clear that Arctic shelf development will start sooner or later. With onshore support bases in their disposal they will be able to enter offshore projects within the shortest time at a well-chosen moment.

Vitaly Chernov