17 February 2011

Presentation of environmental aspects of Shtokman project implementation at RF Federal Council (FC)

On February 17, 2011, a round table session “Environmentally Safe Engineering and Process Solutions for Offshore Oil and Gas Fields Development in the Barents Sea” was held at the Federal Council. The round table was attended by Sergey Mironov, Chairman of the Federal Council of RF Federal Assembly, Victor Orlov, Chairman of FC Committee for Natural Resources and Environment Protection, Vyacheslav Popov, Chairman of FC Commission for National Offshore Policy, Valentin Mezhevich, First Deputy to the Chairman of FC Commission for Natural Monopolies, Vasiliy Duma, Deputy Chairman of FC Committee for Natural Resources and Environment Protection and representatives of Ministries, producers, research agencies and NGO.

In context of this event Alexey Zagorovskiy, Chief Executive Officer of Shtokman Development AG, made a presentation to the round table participants concerning the results of large-scale preparatory works to assure environmental safety of the project.

Shtokman field development is of prime importance as a start project for the Arctic zone development, both considering its economic significance, and acquisition of state-of-art environmentally safe technologies of gas field development in Arctic sensitive ecosystem conditions.

Fully understanding the challenges to be met by the project operators, SDAG did a great preparatory job to assure maximum environmental safety of Shtokman field development: integrated engineering and ecological surveys have been carried out throughout the Shtokman field area, along the pipeline route, on onshore facilities installation places; the best available technologies have been analyzed and chosen for subsea production system and subsea pipeline construction; environmental monitoring and control is provided at all stages of the project implementation. On February 15 in Teriberka (Murmansk Region) Phase I start up facility design engineering documentation materials were discussed, including section “List of Environmental Measures including Environment Impact Assessment (EIA)” with the participation of representatives of environmental organizations (Barents Division of WWF and other public ecological organizations — members of the North Coalition, Kola Saami Association, the North Fishermen Association, etc.).

The path-breaking project requires not only application of cutting-edge technologies to assure environmental safety of the project to meet the requirements of the Russian legislation, but also a faster development of RF legal and regulatory framework, inter alia allowing establishment of favorable conditions for investor attraction and reimbursement of operator costs for development of the region.

In particular, implementation of the project at a level allowing assurance of its environmental safety, requires development of the whole regional infrastructure (Murmansk Region), arrangement of conditions for state-of art technologies and know-how transfer from international companies to Russian companies under the project, as well as encouragement of direct foreign investments in new developments and expansion of plant facilities and service capabilities of Russian enterprises of oil and gas sector.

During the presentation of preparatory work results to assure environmental safety of the Shtokman Project А. Zagorovskiy said: “We interact with the state authorities of Russia at different levels, inter alia with regard to improvement of the legislation applicable to the continental shelf of RF. In connection with innovative nature of the project and stricter requirements to environmental safety, we suggest to review an option to offer state support to Arctic offshore projects. We think that achievement of understanding in this regard will not only promote success of Shtokman, but will also give an impulse of economic development of the north-west regions of Russia, contribute to vertical integration of Russian hydrocarbon production sector, particularly in the fields with severe arctic conditions”.