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© From the archives of the Sozvezdiye (Constellation) Oil and Gas Industry Suppliers Association

Sozvezdiye Association: Regional corporate potential for Arctic projects

Expanding natural resources production in the Arctic is opening up major opportunities for industrial enterprises across the region. The Sozvezdiye (Constellation) Oil and Gas Industry Suppliers Association has been called upon to more actively engage regional enterprises in oil and gas and infrastructure projects. In this interview, the association’s director, Sergei Smirnov, discusses its efforts to expand regional production and high-priority projects.

Your association includes enterprises in the Arkhangelsk Region and Nenets Autonomous Area. Are other regions involved in your activities?

The implementation of major oil and gas projects in the Arctic calls for involving hundreds of highly skilled suppliers and contractors boasting modern and safe technologies. Until recently, foreign experts and technologies, as well as enterprises from various Russian regions, were involved in these projects. The Arkhangelsk Region has always boasted well-developed timber, engineering and shipbuilding industries, among other sectors, as well as navigation through the Northern Sea Route. Currently, we see a sizable potential for expanding local industry as regards producing equipment and marine technology for shelf projects, high-seas drilling rigs and platforms and oil- and gas-refining equipment.

Our task is to expand the involvement of Russian producers and to deliver the entire range of Arctic oil and gas production equipment from regional suppliers and contractors. Regional enterprises from Severodvinsk have gained substantial experience during the construction of the high-seas ice-resistant stationary Prirazlomnaya platform and the self-lifting floating Arkticheskaya drilling rig. However, we need to help even more companies to understand the specifics of working in the oil and gas sector and establish cooperation with oil and gas operators. Currently, Sozvezdiye includes construction and engineering enterprises — those providing marine logistics and port services. Certainly, their list does not include companies from the Arkhangelsk Region alone.

The association is open for cooperation with other Russian regions and cities. We are interested in involving hi-tech companies planning to operate in the Arctic and choosing Arkhangelsk as their venue. We are ready to offer partner-like relations to regional companies, to establish regular contacts with Arctic operators, to offer production facility sites and, of course, human resources in the Arkhangelsk Region. As I see it, it is vital to forge cooperation between Arkhangelsk companies and Ural industrial enterprises to successfully implement Arctic projects.

Does the association only address Arctic projects?

Yes. We live in the Arkhangelsk Region, which provides direct access to the Arctic, and our life is linked with the Arctic region. Since our inception, we have been focusing on the development of the region's industrial, transport and human resources potential. In our opinion, the production of mineral resources should not only boil down to revenues from hydrocarbon sales but also to a multiplier effect that can be achieved by developing various sectors or production facilities, primarily in regions near project-implementation areas. The Arctic should be developed, including by regional companies, as these companies know how to work in a complicated northern environment. We are helping local companies to merge, expand their potential. We are helping them raise the level of their expertise, skills and qualifications because when companies merge, they become stronger, and this leads to positive results. A number of infrastructure, oil and gas and transport projects that can provide employment to thousands of local residents and expand regional industry are implemented in the Arctic region.

What projects are you implementing this year, and in what projects are you involved?

We are closely and simultaneously monitoring the implementation of several projects currently being implemented in the Arctic region. This includes the Yamal Liquefied Natural Gas (LNG) project. We have managed to jointly address technological and operational problems with the project operator and general contractors, collaboratively assess optimal logistics schemes, provide information about the production potentialities of local companies and conduct the preliminary selection and auditing checks of enterprises. We regularly hold contractor presentations, thus making it possible to learn about promising tenders and contractor requirements, and we can offer the potential of local companies.

The project is now in its active construction phase, and over 25 percent of all the works have already been completed — to quote open sources. Enterprises in the Arkhangelsk Region manufacture metal structures, reinforced concrete rafts and other units and components for the plant, and they also build the plant's production facilities in Sabetta. Moreover, the Arkhangelsk port is the main transshipment area handling cargo for the project. To the best of my knowledge, over 400,000 metric tons of freight were shipped through Arkhangelsk in 2014.

The Yamal LNG project became a good school for many Russian companies, and we hope that the Arkhangelsk Region will eventually become more actively involved in Novatek projects on the Yamal and Gydansky peninsulas, and that more hi-tech cooperation will be launched in this area.

I would like to discuss another project being implemented in the Yamal-Nenets Autonomous Area on the Ob Isthmus shelf. Gazprom Dobycha (Production) Yamburg is preparing to develop the Ob, Severo-Kamennomysskoye and Kamennomysskoye-Morye (Sea) gas fields. Their implementation is included in the Gazprom investment program, and design work, geological prospecting and surveying operations are currently underway. The project operator is assessing the potential of Russian shipyards, and shipbuilding enterprises in Severodvinsk are among those that are ready to build platforms and block positioners for the project.

Over the past few years, the Nenets Autonomous Area has become an important fuel and energy region. We believe that the Pechora LNG project, stipulating the development of two gas fields and the creation of a 400-kilometer gas transport infrastructure, the construction of an LNG plant, a comprehensive gas-preparation unit and a gas-shipment terminal in Indiga are among the most promising projects. Pechora LNG can also spur the development of local industry, the shipbuilding sector and transport infrastructure in the Nenets Autonomous Area and Arkhangelsk Region, which have maintained solid longtime ties. They are also reliably linked by sea and air. Add to this impressive integration levels between the Arkhangelsk industry and the educational system in the Nenets Autonomous Area. This gives us reason to believe that the ties between our regions will continue to strengthen in the context of implementing promising oil and gas projects.

Do you cooperate with other countries?

The more active involvement of competitive Russian suppliers and contractors does not bar foreign companies from engaging with us. On the contrary, this encourages the establishment of joint production facilities and the use of international experience for implementing Arctic projects. Global experience shows an international approach during the development of shelf deposits, and the Russian industry also needs international expertise.

Notably, the association aims to promote international alliances that open up additional cooperation prospects, as well as the establishment of joint production facilities in the region and technology transfers.

Most oil and gas projects have an international essence as operators need to obtain advanced technological experience, which has been implemented by various companies in other countries.

With whom does the association usually cooperate? Do you have any permanent foreign partners?

Of course. Nine years ago, when Arctic projects were only picking up momentum and when preparing for the Shtokman project, we cooperated actively with Norway's Petro Arctic and INTSOK oil and gas associations. For example, Petro Arctic members developed the Snovit gas field in Hammerfest, whose population and local industry have now expanded. We have signed an agreement with France's GEP association, we cooperate on the Yamal LNG project, and we organize dialogue between French and Russian suppliers and contractors.

Do they also amount to supplier associations?

Yes. GEP, INTSOK and Petro Arctic deal with oil and gas projects. Finpro encompasses other economic sectors as well. Finland has well-developed shipbuilding and engineering sectors. We need to share our experiences and ensure technology transfers and involve them as partners.

So do you cooperate with Norway, France and Finland?

Yes, and we also cooperate with the Netherlands. Although we cooperate less actively with Dutch oil and gas associations, they are also quite active in the Arctic.

Are there any other associations like yours in sub-Arctic Russia?

Yes. Exactly the same association, Murmanshelf, was established almost simultaneously in Murmansk. We actively cooperated with them while preparing to implement the Shtokman project. However, this project was not launched for reasons beyond our control. Nevertheless, we continue to communicate with them, and we are responding to various projects and cooperation proposals.

Do any other similar associations exist?

As far as I know, there are no other such associations in northern Russia.

So, can Arctic regions ask you for help?

Yes, of course. I repeat again: We are ready to cooperate with companies from any Russian region wishing to operate in the Arctic's expanses.