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2014 October 13

Localization at any cost

The issue of localization of vessels and marine equipment manufacture has become more acute as the development of offshore fields has intensified amid international sanctions against Russia. Oil and gas companies have resources and are willing to place orders with national enterprises but it requires well-defined backlog of orders and adequate state programmes.

The devil is in the depth for Russia

Oil and gas companies of Russia have large-scale plans on the development of the continental shelf. 

As Valery Golubev, Deputy Chairman of the Management Committee of Gazprom, said at the International Conference and Exhibition dedicated to shipbuilding and development of high-tech equipment for continental shelf projects, the major task of the industry today is to ensure a scientific potential and to develop design institutions as Russia generally has enough production facilities. There is not much time left amid depletion of reserves at the existing fields.

Gazprom will require specialized vessels and equipment for preliminary operations, long before the active production phase at the majority of new offshore projects scheduled for 2030-35. 

Gazprom is supposed to drill 50 exploratory wells, and probably 30 additional probe wells in case of positive results within the coming 10 years. The most active operations are to be carried out in the Barents Sea while the Kara Sea is considered to be the most promising region. Meanwhile, such projects as the South-Kirinskoye field will require equipment ensuring sustainable operation in severe climatic and hydrological conditions. “Icebreakers and powerful drilling ships alone are not sufficient there,” Valery Golubev says.

According to him, Gazprom is willing to place and prepay orders worth RUB 100 bln to build vessels needed for shelf development. He says the Company will need 30 auxiliary vessels in the nearest future and ten drilling rigs within the 10-year period. Besides, numerous marine facilities will be required for field infrastructure development. “This amount of vessels is not available at either domestic or foreign market today”, Valery Golubev says.

He notes that Krylov State Research Center has developed a range of modular ships needed for the Company. The projects of such vessels are ready for introduction into shipbuilding practice, Gazprom representative underlines. 

Manufacture of subsea production facilities is an urgent issue as well. Gazprom has already had the experience of subsea production at Kirinskoye field but they use the equipment produced by foreign manufacturers. Menwhile, the company is set to drill 8 additional operating wells at the Kirinskoye field, some 22 gas wells and 18 oil wells at the South Kirinskoye field and 72 operating wells at the Shtokman field. Other fields (Leninskoye, Leningradskoye, etc.) will see the development of about 60 wells. Subsea production technology will be used there. 

Besides, it is necessary to create coastal bases to support offshore projects. The only base is available in Murmansk today, but such bases are required in the eastern seas of the Arctic region. The coastal bases are to ensure servicing of the specialized vessels, handling and technological operations. This is an additional challenge for the domestic industry.

The projects of Rosneft are also ambitious. The company has began drilling at Universitetskaya-1well in the Kara Sea. In order to ensure construction of vessels and equipment for its projects with local manufacturing content of 70% the company is set to develop two shipbuilding clusters – in Vladivostok and in Murmansk. 

Far East cluster will focus on building and repairing of vessels while marine equipment and drilling rigs are to be manufactured in Murmansk. Also, Murmansk hosts a base supporting the company’s Arctic projects.  Together with its partners Rosneft has set up an Arctic scientific center focused on research in the sphere of seismic, ice and environmental situation which requires special approach to designing of vessels, platforms and equipment, see >>>>.

Apart from the Arctic, Russia is going to build up offshore production in other regions. In late 2015, LUKOIL is supposed to commence operation of the V. Filanovsky field, largest field in the Caspian Sea with annual production of some 6 mln t. LUKOIL has also recently discovered a new field in the Blatic Sea.

As Ilya Mandrik, Vice-President of LUKOIL, said at the above mentioned conference, it is necessary to ensure equal access to subsurface resources for the companies of national importance. A state programme is required to create all technologies necessary for offshore project development, from geological exploration to operation of fields.

Shipbuilders without portfolio

Aleksey Diky, Director of the Military-Technical Cooperation Department of the United Shipbuilding Corporation, says USC was to secure 15 orders per year for several years already and to be engages in 45 orders by today. In fact, USC has executed the order under Prirazlomnaya project and is currently building three 16 MW diesel icebreakers and one 25 MW icebreakers, as well as 60 MW nuclear icebreaker (a contract has been signed for two serial icebreakers).

Aleksey Diky thinks that Baltiysky Zavod alone is able to build four icebreakers per year if it is fully staffed by engineering personnel, specialists and workers. 

“Our current backlog of orders cannot be compared with the amount of orders we could have,” USC representative said. 

He emphasized that shipbuilders should understand in advance what, when and with what local manufacturing content should be produced. An appropriate shipbuilding programme should be elaborated in conjunction with the customers, Aleksey Diky emphasized. This will ensure an opportunity to invest in adequate preparing of shipbuilding enterprises. 

Nevertheless, he says international sanctions cause negative impact on domestic shipbuilding because of the ban on providing Russia with technologies related to geological exploration and other offshore activities. Consequently, USC is set to ensure localization but it needs a well-defined backlog of orders to achieve this target.

Vitaly Chernov

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