NEW RELEASE. Natural Gas Production in Russia:

Transcription

1 NEW RELEASE Natural Gas Production in Russia: July 2008

2 NATURAL GAS PRODUCTION IN RUSSIA Research Study With global demand for natural gas on the rise, the issue of stable supplies is closely tied to gas reserves being available and monetized. Russia is the world s largest holder, producer and exporter of natural gas - as well as the largest single supplier of gas to European markets - and Gazprom is its sole gas exporter to international markets. Given Gazprom s importance as a key supplier, concerns are frequently and predictably raised about whether Russia could be counted on as a sustainable gas exporter. Natural Gas Production in Russia, the second study within RPI s Eurasian Gas Research Service 2008, reviews this standpoint by giving a comprehensive and detailed analysis of the current status and development outlook for Russia s gas industry up to For the period of gas production in Russia increased from to 654 bcm, primarily due to Gazprom s bringing onstream new fields (including the start of commercial production at the Yuzhno-Russkoye field in December 2007). By 2020, Gazprom alone plans to produce bcm per year. Gas growth to bcm by the same year is expected to come from other gas producers, such as LUKOIL, Novatek, Rosneft, TNK-BP, etc. Nevertheless, Russia s gas industry is challenged by substantial reserves depletion at traditional fields with subsequent rise of gas recovery costs and by the necessity in huge investments to develop new gas provinces. Most frequently, these issues lie at the root of reservations about Russia s ability to satisfy rising gas demand internationally and domestically. Key issues Natural Gas Production in Russia addresses are: Evaluation of Russia s production potential to 2020 Analysis of strategies of Russian gas producing companies 1

3 Assessment of gas production capital expenditures needed to meet the growing gas demand locally and on global markets Analysis of the supply/demand scenarios Together with a comprehensive in-depth analysis of the Russian gas industry and an examination of production prospects at currently developed fields, the study provides outlook for implementation of upstream strategies by Gazprom and other gas producing companies up to Key questions addressed in the study: What was the dynamics of natural gas production in Russia for the period of ? What is the legal and tax regulation of the Russian gas industry s upstream segment? What is the production potential of Gazprom and independent gas producers at traditional gas fields up to 2020? What is Gazprom s strategy with regard to independent producers? What are the opportunities for Russian gas producing companies to sustain and increase current production rates? What capital expenditures are needed for further development of natural gas upstream segment? What is the calculated price of natural gas coming from different fields at the Russian border and how could it change? What are the key factors expected to influence natural gas production in Russia? Natural Gas Production in Russia examines the current status and prospects for gas production by Gazprom s 17 subsidiaries, affiliated companies and 6 independent gas producers. The study is unique in providing a cost-plus assessment of supplies from a field to the Russian border for major Russian gas assets forecasted to Combined with the netbacks for 42 importing countries to the Russian border to 2020 forecasted in the study Russian Gas on Global Markets: Potential, Strategies and Outlook (released 2

4 by RPI in March 2008) it completes the picture of Russia s gas supplies competitive ability on global markets. Key data in each producing company profile covers: Current reserves base Historical production Transportation routes for gas produced Production potential to 2020 Capital expenditures for further development Cost plus assessment from field to current and/or potential exit points at Russian border (for major assets only) Similarly structured is the examination of new gas fields and provinces: Yamal Peninsula: Bovanenkovskoye and Kharasaveiskoye fields Shtokmanovskoye field Ob-Taz Bay fields Eastern Siberia fields Russian Far East fields (including Sakhalin) Cost plus assessments for some of these regions appear in published research for the first time. Natural Gas Production in Russia develops two scenarios for gas production in Russia in based on: Demand for natural gas in Europe, CIS, North-East Asia, North America Gazprom s contracted and supplied export volumes, current and projected Projected gas prices on export markets Economic feasibility of developing new fields Transportation capability for delivering gas from field to local and international consumers Gas producers plans for tapping new fields 3

5 The scenarios also take into account forecasts of gas production capital expenditures by Gazprom and other producing companies Natural Gas Production in Russia is an essential analytical support tool for: energy policy-makers integrated energy companies gas producers gas transportation and trading companies financial and investment institutions contractors and equipment suppliers Natural Gas Production in Russia Release: July 2008 Languages: English, Russian Volume: 366 pages, more than 270 charts and graphs Price: 9,500 EURO See enclosed detailed table of contents and sample gas producer profile To order the study, please fill in the order form on the last page. Other RPI s studies and reports focused on Russian/FSU/European gas: FSU Oil and Gas Statistic Yearbook 2008 (June 2008) Russian Gas on Global Markets: Potential, Strategies and Outlook (March 2008) Oil and Gas of Uzbekistan (December 2007) Russian LNG Projects: Reality and Prospects (July 2007) Oil and Gas of Eastern Siberia and Russian Far East (May 2007) South Eastern Europe in the Big Eurasian Gas Game (March 2007) Kazakhstan s Oil and Gas Upstream (November 2006) The Independent Gas Producers in Russia (March 2006) 4

6 Natural Gas Production in Russia: Contents Author... 3 Chapter 1. Current State of Gas Production in Russia Brief history of gas production in Russia before Formation of new gas production structure in Russia ( ) Modern structure of gas production in Russia. Classification of Russian gas companies in Russia s modern resource base Distribution of the reserves among subsoil users Chapter 2. Current Natural Gas Production Policy of the State Gas production in Russia s Energy Strategy until Subsoil-use laws in Russia Subsoil Law Gas Supply Law Mineral Extraction Tax (MET) Chapter 3. Current and Prospective Production in Gazprom s Existing Fields Gazprom s production in the Nadym-Pur-Taz Region Urengoygazprom (Gazprom Dobycha Urengoy) Nadymgazprom (Gazprom Dobycha Nadym) Yamburggazdobycha (Gazprom Dobycha Yamburg) Noyabrskgazdobycha (Gazprom Dobycha Noyabrsk) Purgazdobycha Severneftegazprom Achimgaz Purgaz Northgas Producing enterprises of OAO Gazprom outside the Nadym-Pur-Taz Region Astrakhangazprom (Gazprom Dobycha Astrakhan) Orenburggazprom (Gazprom Dobycha Orenburg) Stimul Severgazprom (Gazprom Dobycha Ukhta/ Gazprom Pererabotka) Tomskgazprom (Vostokgazprom) Sevmorneftegaz Analysis of gas production potential in the current gas production regions of Gazprom until Production from the existing fields of the Nadym-Pur-Taz Region Gas production from the existing fields outside the Nadym-Pur-Taz Region Consolidated forecast of gas production from the existing fields controlled by.. Gazprom (NPTR and non-nptr). Scenario This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow 5

7 Natural Gas Production in Russia: Scenario of inclusion of Enineftegaz and Sibneftegaz in Gazprom s portfolio. Scenario Gas production potential in the current gas production regions of Gazprom Chapter 4. Independent Gas Producers Itera NOVATEK Gas production by oil companies LUKOIL Rosneft TNK-ВР Surgutneftegas Other producers Production potential of independent producers Chapter 5. Promising Regions in Terms for Long-Term Gas Production Development Until Rationale for production in new areas Yamal Peninsula: development prospects Development of the Shtokmanovskoye field Development of the Ob and Taz Bay fields Eastern Siberia and Russian Far East Chapter 6. Factors Influencing Gas Production Growth in Russia Demand factor Import factor Gas transportation system development Chapter 7. Russian Gas Production Growth Scenarios Out to Russian company production capacity and investment requirements The Base Scenario (Blue Scenario) Moderate Scenario (White Scenario) Alternative scenarios Conclusions Conclusions This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow

8 Natural Gas Production in Russia: Map Map 1.1. Main oil-and-gas provinces of Russia and Federal Districts Map 3.1. System for the transportation of gas produced by Gazprom Dobycha Urengoy Map 3.2. Fields licenses for which are held by Nadymgazprom and the adjacent gas transportation infrastructure...90 Map 3.3. Fields licenses for which are held by Yamburggazdobycha and the adjacent gas transportation infrastructure...98 Map 3.4. Fields with licenses held by Noyabrskgazdobycha and the adjacent gas transportation infrastructure Map 3.5. Gas transportation infrastructure for gas supplies from the South-Russkoye field Map 3.6. Nord Stream pipeline route Map 3.7. Astrakhanskoye field and gas transportation directions Map 3.8. Transportation routes for gas produced by Orenburggazprom Map 3.9. System for the transportation of gas from the fields of Tomskgazprom Map Gas fields of Enineftegaz and Sibneftegaz Map 4.1. Fields of NOVATEK Map 4.2. System of gas transportation from NOVATEK s fields Map 4.3. NOVATEK s gas supplies to principal industrial regions Map 4.4. LUKOIL s gas reserves Map 4.5. LUKOIL s fields in Western Siberia Map 4.6. LUKOIL s Caspian fields Map 4.7. Model of gas and condensate transportation from the Bolshekhetskaya depression fields Map 4.8. Rosneft s fields in Russia Map 4.9. Kharampurskoye field with possible gas transportation directions Map TNK-ВР s fields in Russia Map Surgutneftegas s fields in Western Siberia Map 5.1. Gas fields of the Yamal Peninsula Map 5.2. Obskaya-Bovanenkovo railroad under construction Map 5.3. Principal and supplementary gas transportation routes from Yamal fields Map 5.4. Vidyaevo and Teriberka sites Map 5.5. Model for the pipeline transportation of gas from the Shtokmanovskoye field Map 5.6. Ob and Taz Bay fields Map 5.7. Transportation of gas from the Ob and Taz Bay fields Map 5.8. Kovyktinskoye gas and condensate field Map 5.9. Chayandinskoye field Map Yurubcheno-Takhomskoye field Map Sobinsk and Paiginskaya group of fields Map Sakhalin-1 Project This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow 7

9 Natural Gas Production in Russia: Map Infrastructure of the Sakhalin-2 project Map 6.1. Trans-Caspian gas pipeline project Map 6.2. Central Asia-Center gas pipeline Map 6.3. South Stream pipeline Map 6.4. Plans to develop Eastern Siberia and Far East transportation routes This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow

10 Natural Gas Production in Russia: Charts Chart 1.1. Distribution of natural gas reserves in the USSR in the early fifties Chart 1.2. Gas production in the USSR from 1970 to 1990 (bcm) Chart 1.3. Production and reserves growth in Russia from 1991 to 2001 (bcm) Chart 1.4. Sales growth in the European market from 2001 to 2007 (USD billion) Chart 1.5. Dynamics of Gazprom s market capitalization (USD billion) Chart 1.6. Russian gas market in Chart 1.7. Gas production in Russia from 2002 to 2007 (bcm) Chart 1.8. Structure of natural and associated gas production in Russia Chart 1.9. Distribution of proved gas reserves in the world as of Chart State of gas reserves development in Russia Chart Distribution of proved gas reserves throughout North-Western Federal District Chart Distribution of proved gas reserves throughout Southern Federal District Chart Distribution of proved gas reserves throughout Volga Region Federal District Chart Distribution of proved gas reserves throughout the Ural Federal District Chart Distribution of proved gas reserves throughout Siberian Federal District Chart Distribution of proved gas reserves throughout the Far Eastern Federal District Chart Distribution of proved gas reserves throughout the Sea Shelf Plates Chart Distribution of proved gas reserves of Russia Chart Dynamics of Gazprom s natural gas reserves in (tcm) Chart International audit of selected Gazprom s gas reserves in comparison with the Russian classification system (tcm) Chart Distribution of Gazprom s gas reserves throughout Federal Districts of Russia in Chart Gazprom s largest gas fields (АВС1 category) as of (tcm) Chart The number of licenses for exploration and development of hydrocarbones (units) Chart Results and forecast of Gazprom s reserve increment based on the assets and as a result of exploration work in Chart Development of proved reserves of independent gas companies (tcm) Chart 2.1. Oil, coal and natural gas production forecast figures in the Energy Strategy of Russia in and actual figures in Chart 2.2. Actual ( ) and forecast gas production by Gazprom and independent producers in 2010 and Chart 2.3. Gas production forecast by region (bcm) Chart 2.4. Gas price forecasts in the Energy Strategy and Gazprom s current estimates from 2005 to Chart 2.5. Natural gas MET changes in (Russian Roubles) Chart 3.1. Gazprom s gas production from 2000 to 2007 (bcm) Chart 3.2. Gazprom s gas production within and beyond the Nadym-Pur-Taz region from 2000 to 2007 (bcm) This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow 9

11 Natural Gas Production in Russia: Chart 3.3. Schedule of commissioning of IGPFs and gas production growth in the Urengoyskoye field (bcm) Chart 3.4. Gas production of Urengoygazprom from 2000 to 2007 (bcm) Chart 3.5. Gas and condensate processing by West Siberian integrated processing plant Chart 3.6. Production at Urengoy gas processing plant in 2007 (thousand tonnes) Chart 3.7. Production at Surgut gas processing plant in 2007 (thousand tonnes) Chart 3.8. Gas production potential of Gazprom Dobycha Urengoy from 2007 to 2020 (bcm) 83 Chart 3.9. Percentage of old and new fields of Urengoygazprom from 2007 to Chart Prospects for changes in the wellhead prices of Gazprom Dobycha Urengoy (nominal USD per 1,000 cubic meters) Chart Nadymgazprom s gas production from 2000 to 2007 (bcm) Chart Gas production potential of Gazprom Dobycha Nadym from 2007 to 2020 (bcm) Chart Prospects for changes in the wellhead prices of Gazprom Dobycha Nadym (USD per 1,000 cubic meters) Chart Composition of gas from Cenomanian reservoir of the Yamburgskoye gas condensate field Chart Composition of gas from the Zapolyarnoye field Chart Gas production of Yamburggazdobycha from 2000 to 2007 (bcm) Chart Gas production potential of Gazprom Dobycha Yamburg from 2007 to 2020 (bcm) Chart Percentage of old and new fields of Gazprom Dobycha Yamburg from 2007 to Chart Prospects for changes in the wellhead prices of Gazprom Dobycha Yamburg (USD per 1,000 cubic meters) Chart Gas production of Noyabrskgazdobycha from 2000 to 2007 (bcm) Chart Gas production potential of Gazprom Dobycha Noyabrsk from 2007 to 2020 (bcm) Chart Prospects for changes in the wellhead prices of Gazprom Dobycha Noyabrsk (USD per 1,000 cubic meters) Chart Business model of operation of Purgazdobycha Chart Gas production potential from the West-Tarkosalinskoye field from 2007 to 2020 (bcm) Chart Model for the transfer of title to the South-Russkoye field development from 1993 to Chart Stakes in Severneftegazprom held by project participants in voting shares and project income Chart Business model of Severneftegazprom Chart Gas production potential in the South Russkoye field from 2007 to 2020 (bcm) Chart Business model of Achimgaz from Chart Gas production potential of Achimgaz to 2020 (bcm) Chart Business model of Purgaz This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow

12 Natural Gas Production in Russia: Chart Gas production potential from the Gubkinskoye field of Purgaz from 2007 to 2020 (bcm) Chart Current allocation of shares in Northgas Chart Gas production of Northgas from 2001 to 2007 (bcm) Chart Gas production potential in the North-Urengoyskoye field from 2007 to 2020 (bcm) Chart Composition of gas from the Astrakhanskoye field Chart Gas production of Astrakhangazprom from 2000 to 2007 (bcm) Chart Process flow chart of Astrakhan integrated plant Chart Gas processing at Astrakhan GPP and production of hydrocarbon liquids Chart Production potential of Gazprom Dobycha Astrakhan from 2007 to 2020 (bcm) Chart Prospects for changes in the wellhead prices of Gazprom Dobycha Astrakhan (USD per 1,000 cubic meters) Chart Composition of gas of the Orenburgskoye field Chart Gas production of Orenburggazprom from 2000 to 2007 (bcm) Chart Process flow chart of the Orenburg Gas Processing Plant Chart Gas production potential for the Orenburgskoye field from 2007 to 2020 (bcm). 144 Chart Gas production of Stimul from 2003 to 2007 (bcm) Chart Gas production of Severgazprom from 2000 to 2007 (bcm) Chart Processing at Sosnogorsk GPP Chart Gas production potential from the fields of Severgazprom from 2007 to 2020 (bcm) Chart Gas production potential of Tomskgazprom from 2000 to 2007 (bcm) Chart Gas production potential of Tomskgazprom from 2007 to 2020 (bcm) Chart Gas production of Kubangazprom from 2000 to 2007 (bcm) Chart Gas production potential of Gazpromtransgas Kuban from 2007 to 2020 (bcm) Chart Gas production potential of Gazprom s companies in the Nadym-Pur-Taz Region (wholly owned by Gazprom) from 2007 to 2020 (bcm) Chart Gas production potential of Gazprom s companies in the Nadym-Pur-Taz Region (in which Gazprom holds 50 percent or more) from 2007 to 2020 (bcm) Chart Total gas production potential of Gazprom s companies in the Nadym-Pur-Taz Region from 2007 to 2020 (bcm) Chart Total gas production potential of Gazprom s companies outside the Nadym-Pur-Taz Region from 2007 to 2020 (bcm) Chart Consolidated forecast of gas production from the existing fields controlled by Gazprom (NPTR and non-nptr) from 2007 to 2020 (bcm) Chart Gas production of Arcticgas, (bcm) Chart Gas production potential of Sever Energiya from 2010 to 2020 (bcm) Chart Gas production potential of Sibneftegaz from 2007 to 2020 (bcm) This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow 11

13 Natural Gas Production in Russia: Chart Consolidated forecast of gas production from the existing fields of Gazprom according to Scenario 2 (NPTR and non- NPTR) from 2007 to 2020 (bcm) Chart Share of enterprises in which Gazprom owns 50 percent or more in Gazprom s total production (NPTR and non- NPTR) according to Scenario 2 from 2007 to Chart Consolidated forecast of gas production from the existing fields of Gazprom according to Scenario 2 (NPTR and non- NPTR) from 2007 to 2020 (bcm) Chart 4.1. NOVATEK s equity structure as of December 31, Chart 4.2. Natural gas reserves (bcm) Chart 4.3. NOVATEK s gas production 2000 to 2007 (bcm) Chart 4.4. Gas production in the Yurkharovskoye field (bcm) Chart 4.5. Gas production in the Vostochno-Tarkosalinskoye field (bcm) Chart 4.6. Gas production in the Khancheiskoye field (bcm) Chart 4.7. Production indicators of Purovsky Plant (thousand tonnes) Chart 4.8. NOVATEK s gas production potential from 2007 to 2020 (bcm) Chart 4.9. NOVATEK s capital expenditures in connection with exploration from 2008 to 2015 (USD million) Chart Gas production by oil companies 2000 to 2007 (bcm) Chart Regions of LUKOIL s gas production Chart LUKOIL s gas production 2000 to 2007 (bcm) Chart Gas production in the Nakhodkinskoye field from 2004 to 2007 (bcm) Chart Gas production of the Bolshekhetskaya Depression fields from 2007 to 2020 (bcm) Chart Gas production of North Caspian fields 2009 to 2020 (bcm) Chart LUKOIL s gas production potential 2007 to 2020 (bcm) Chart Regions of Rosneft s gas production Chart Rosneft s gas production from 2000 to 2007 (bcm) Chart Gas production potential of Rosneft from 2007 to 2020 (in European Russia) (bcm) Chart Regional breakdown of TNK-BP s gas production Chart TNK-ВР s gas production from 2002 to 2007 (bcm) Chart Rospan s gas production from 2001 to 2007 (bcm) Chart TNK-ВР s gas production potential from 2007 to 2020 (European Russia) (bcm) Chart Surgutneftegas s gas production from 2001 to 2007 (bcm) Chart Surgutneftegas s gas production potential from 2007 to 2020 (bcm) Chart Gas production potential by asset of oil companies and independent gas producers (current boundaries of the UGSS) from 2007 to 2020 (bcm) Chart 5.1. Gas reserves of the Bovanenkovskoye and Shtokmanovskoye fields, the Ob and Taz Bays, the Achimov Formation of the NPTR (tcm) Chart 5.2. Gas production in Yamal to achieve 250 bcma as estimated by Gazprom (bcm) Chart 5.3. Schedule of gas production in the Bovanenkovskoye field from the date of its planned commissioning until 2020 (bcm) This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow

14 Natural Gas Production in Russia: Chart 5.4. General schedule of development of the Kharasaveiskoye field reservoirs (bcm per year) Chart 5.5. Yamal field licensing phases Chart 5.6. Shareholders of Shtokman Development AG Chart 5.7. Forecast gas sales during the first phase of Shtokman project Chart 5.8. Business model of the first phase Shtokman project Chart 5.9. Model of subsea development of the Shtokmanovskoye field Chart Two concepts of the Shtokmanovskoye field development (70 bcm and 95 bcm) 268 Chart The development schedule of phase one of the Shtokmanovskoye field Chart Most attractive terminals for LNG delivery from Shtokman (cost components include shipping, regasification and local pipeline costs, as a percentage of the best option) Chart General plan of development of the Ob and Taz Bay fields (bcm) Chart Production potential of Eastern Siberia and the Far East from 2007 to 2020 (bcm) Chart Resource base of the Kovyktinsky and Khandinsky license areas controlled by Rusia Petroleum (bcm) Chart Current shareholding structure of Rusia Petroleum Chart Potential distribution of gas from the Kovyktinskoye field under the international feasibility study project (bcm per year) Chart Possible parameters of the Kovyktinskoye field development Chart Regional scenario implementation schedule Chart Gas supplies from the Kovyktinskoye field according to regional scenario (bcm). 293 Chart Composition of gas from the Chayandinskoye field Chart Possible options of gas production in Chayandinskoye (bcm) Chart Proved crude oil, gas and condensate reserves of the Sobinskoye and Paiginskoye fields Chart Possible annual gas production in Sobinskoye and Paiginskoye fields Chart Current shareholders of the Sakhalin-1 project Chart Composition of gas from Odoptu-More Chart Composition of gas from the Chaivo field Chart Sakhalin-1 gas production in (bcm) Chart Investment in Sakhalin-1 project (USD billion) Chart Potential gas production under the Sakhalin-1 project until 2020 (bcm) Chart Shares in Sakhalin Energy before negotiations with Gazprom Chart Current owners of Sakhalin Energy Chart Oil, gas and condensate reserves of the Sakhalin-2 project fields Chart Piltun-Astokhskoye gas composition Chart Lunsoye gas composition Chart Sakhalin-2 gas annual production potential (bcm) Chart Sakhalin-3 gas annual production potential (bcm) Chart Forecast output in the current fields in operation in the Far East (bcm) This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow 13

15 Natural Gas Production in Russia: Chart 6.1. Natural gas consumption in Russia in 2007 by sector (without transportation gas) Chart 6.2. Gas consumption growth trend and average gas prices for industry and households in Chart 6.3. Gas demand in Russia in (bcm) Chart 6.4. Gazprom gas exports from Russia (bcm) Chart 6.5. Gazprom gas exports to Western and Central Europe in 2007 (bcm) Chart 6.6. Natural gas exports to CIS and Baltic States in 2007 (bcm) Chart 6.7. LNG self-contracting model Chart 6.8. Global market demand forecast for Russian gas, by scenario, in (bcm) 334 Chart 6.9. Global market and domestic demand forecast for Russian gas, by scenario, in (bcm) Chart Global market and domestic demand forecast for Russian gas, for Europe and Asia for the White scenario (bcm) Chart Global market and domestic demand forecast for Russian gas, for Europe and Asia for the Blue scenario (bcm) Chart Natural gas reserves of Kazakhstan, Turkmenistan and Uzbekistan (tcm) Chart 7.1. Russian gas production growth potential (bcm) Chart 7.2. Investments in production facilities by region (USD billion). Maximum case Chart 7.3. Investments in production by Gazprom and other producing companies (USD billion) Chart 7.4. Balance between demand under the Blue Scenario and production potential (bcm) Chart 7.5. Russian gas production (bcm). The Blue Scenario Chart 7.6. Investments in production assets by region (USD billion). The Blue Scenario Chart 7.7. Investments in production by Gazprom and other producing companies (USD billion). The Blue Scenario Chart 7.8. Balance between the demand under White Scenario and production potential (bcm) Chart 7.9. Russian gas production (bcm). The White Scenario Chart Investments in production assets by region (USD billion). The White Scenario Chart Investments in production by Gazprom and other producing companies (USD billion). The White Scenario This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow

16 Natural Gas Production in Russia: Tables Table 1.1. Short list of acquired or regained assets Table 1.2. History of Gazprom s credit rating as of the end of 2003 till Table 1.3. Trend of natural gas and associated gas production by the independent gas producers and Oil Companies in Russia in (bcm) Table 1.4. Classification of oil and gas reserves adopted in Russia and the USA Table 1.5. Distribution of natural gas reserves in Russia by Federal Districts Table 1.6. Ratio of gas production and gas reserve increment Table 2.1. Recoverable reserves of the federal category fields Table 2.2. Federal category gas fields Table 2.2. Federal category gas fields (continuation) Table 2.3. Federal and regional governments powers Table 2.3. Federal and regional governments powers (continuation) Table 2.3. Federal and regional governments powers (continuation) Table 2.4. Subsoil blocks use periods Table 2.5. Gas resources auctions proposed for Table 2.6. Current MET rates Table 3.1. Basic Fields of Urengoygazprom Table 3.2. Planned gas production from the new zones developed by Urengoygazprom from 2000 to Table 3.3. Cost-plus from Urengoy field to the Belarus border, Ukrainian border, Nord Stream pipeline entry point, Blue Stream pipeline entry point (nominal USD per 1,000 cubic meters) Table 3.4. Basic fields of Nadymgazprom Table 3.5. Basic fields of the Yamburggazdobycha Table 3.6. Planned production from the Yamburggazdobycha fields Table 3.7. Cost-plus from Yamburg to the Ukrainian border and Blue Stream pipeline entry point (nominal USD per 1,000 cubic meters) Table 3.8. Basic fields of Noyabrskgazdobycha Table 3.9. Gas production from the fields of Noyabrskgazdobycha Table Cost-plus from South-Urengoyskoye field to the Nord Stream pipeline entry point and Belarusian border (nominal USD per 1,000 cubic meters) Table Geological reserves of the North-Urengoyskoye field Table Cost-plus from Orenburgskoye field to the Ukrainian border and Blue Stream entry point (nominal USD per 1,000 cubic meters) Table Basic fields of Severgazprom Table Basic fields of Enineftegaz Table 4.1. Equity gas production of Itera Group in the early 2000s Table 4.2. Itera s reserves in the early 2000s (bcm) Table 4.3. Structure of the upstream and processing assets of NOVATEK (as of beginning of 2008) This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow 15

17 Natural Gas Production in Russia: Table 4.4. Basic fields of NOVATEK Table 4.5. Owners of licenses for the principal fields of NOVATEK Table 4.6. Capital expenditures in NOVATEK s principal fields from 2008 to 2015 (USD million) Table 4.6. Capital expenditures in principal fields from 2008 to 2015 (USD million) (Continuation) Table 4.7. Cost-plus from Yurkharovskoye field to the Ukrainian border and Dzhubga (nominal USD per 1,000 cubic meters) Table 4.8. Basic fields of LUKOIL (Russian classification) Table 4.9. Rosneft basic fields (Russian classification) Table Cost-plus* from Kharampurskoye field to the Ukrainian border and Dzhubga (nominal USD per 1,000 cubic meters) Table Rospan basic fields (Russian classification) Table Cost-plus from Vostochno-Urengoyskoye field to the Ukrainian border and Dzhubga (nominal USD per 1,000 cubic meters) Table Surgutneftegas basic fields Table 5.1. Production potential of the basic groups of Yamal fields Table 5.2. Gas reserves of the Bovanenkovskoye field (bcm) Table 5.3. Composition of natural gas from the Bovanenkovskoye field Table 5.4. Cost-plus from Bovanenkovskoye field to the Nord Stream pipeline entry point and Belarusian border (nominal USD per 1,000 cubic meters) Table 5.5. Gas reserves of the Kharasaveiskoye field (bcm) Table 5.6. SWOT analysis of the Bovanenkovskoye and Kharasaveiskoye field development project Table 5.7. Yamal fields included in the list of non-licensed strategic fields Table 5.8. Resource base of Yamal blocks to be licensed in the future broken down by Group 257 Table 5.9. Cost-plus from Shtokman to the liquefaction plant loading arm and Nord Stream pipeline entry point (nominal USD per 1,000 cubic meters) Table SWOT analysis of the Shtokman project Table Reserves of the Ob and Taz Bay fields Table Cost-plus from Ob and Taz Bay fields to the Ukrainian border and Dzhubga (nominal USD per 1,000 cubic meters) Table General characteristics of the Kovyktinskoye field Table Composition of gas from the Kovyktinskoye field Table Cost-plus from Kovyktinskoye field to the Ukrainian and China borders (nominal USD per 1,000 cubic meters) Table Cost-plus from Sakhalin-1 to China border (nominal USD per 1,000 cubic meters) 307 Table Cost-plus from Sakhalin-2 to the liquefaction plant loading arm (nominal USD per 1,000 cubic meters) Table Cost-plus from Sakhalin-3 to China border (nominal USD per 1,000 cubic meters) Table 6.1. Unified Gas Supply System in This work may not be photocopied or otherwise reproduced in any form or for any purpose without prior knowledge and consent of RPI Copy of IsIamic Republic of Iran Embassy in Moscow

18 Gazprom Dobycha Orenburg (former Orenburggazprom) Orenburggazprom is a wholly-owned subsidiary of Gazprom. Orenburggazprom includes the largest integrated gas processing plant in Russia, which is one of the principal suppliers of helium to the European markets, and of ethane and pentane-hexane to the Russian market. The company was organized for the development of the Orenburgskoye oil and gas condensate field discovered in Two plants a gas processing plant and a helium plant were built to process the extracted gas. In the early 1980s, Orenburggazprom began developing the Karachaganakskoye gas condensate field in Kazakhstan. Subsequently, the experience gained helped the company to develop the Astrakhanskoye gas field. Since February 2003, Orenburggazprom has been headed by Sergei Ivanov, who had prior experience working for Vietsovpetro, Chernomorneftegaz, and held the position of Minister of Fuel and Energy of the Autonomous Republic of Crimea (Ukraine). In 2007, during the period of internal reforms in Gazprom, the company was renamed to Gazprom Dobycha Orenburg. Reserves Base The Orenburgskoye oil and gas condensate field has АВС 1 reserves of 820 bcm and C 2 reserves of about 60 bcm. More than 1 trillion cubic meters have been cumulatively produced during its development. The field s gas contains up to 2% of hydrogen sulphide. The principal reservoirs occur at depths ranging from 1,300 to 2,600 m. Figure 1. Composition of gas of the Orenburgskoye field 1.6% 0.8% 1.7% 4.0% 1.8% 0.5% 5.4% 84.3% methane ethane propane buthanes pentane plus nitrogen carbon dioxide hydrogen sulphide Source: Gazprom 17

19 Field Development The gas production division of Orenburggazprom produces gas, condensate and crude oil from the Orenburgskoye oil and gas condensate field. The development of the Orenburgskoye field started in the early 1970s. In the period from 1971 to 1979 eleven gas processing facilities (GPFs) were commissioned in five construction phases on a-step-by-step basis. GPF 6 was commissioned in 1973, GPF 7 started the work in April 1974, GPFs 8, 3, 9 - in 1975, GPF 1 - in December 1977, and GPFs10, 12, 14 and 15 were completed in In 1979, the subsidiary reached peak production of 48.7 bcm of gas. In the 1980s, Orenburggazprom operated at annual design capacity of 45 billion cubic meters of gas and 3.2 million tonnes of gas condensate, which allowed to utilize the full capacity of both the gas processing plant and the helium plant, the latter almost entirely servicing the defense industry. In 1986, the Orenburgskoye field entered the phase of declining production, characterized by decline in formation pressure, high temperature of extracted gas, changes in gas quality, etc. During this phase, the compressor-free operation of the field ended, making necessary the construction of gas booster stations GBS-1 and GBS-2. In the early 2000s, the Orenburg Integrated Gas Chemical Plant produced its trillionth cubic meter of gas. The current gas producing well stock consists of a total of 739 wells. In the period from 2000 to 2007 gas production from the field reduced considerably, to 18 bcm per year. Today, the field operation is aimed at maintaining planned production level from the principal reservoir and at tapping undeveloped reservoirs of oil, to be supplied to the existing production facilities of the Orenburg Integrated Gas Chemical Plant. In 2006, gas booster station 3 was built to stabilize gas production at 18 billion cubic meters per year. CCGT-10PKhG 5 gas-turbine units by Permskiye Motory were ordered to build GBS 3. Moreover, GBS 1 and 2 are being switched to the second compression stage. Apart from gas production and processing, the company expects to start producing and refining crude oil. Reservoirs of the Orenburg field contain 230 million tones of crude. 18

20 Figure 2. Gas production of Orenburggazprom from 2000 to 2007, bcm Source: InfoTEK Gas and Condensate Processing The huge reserves of the Orenburgskoye gas condensate field and the uniqueness of composition of gas (hydrogen sulphide, methane, ethane, propane, butane, pentane, helium, mercaptans) and gas condensate (aromatic, naphthene and methane hydrocarbons), led to the construction of the Orenburg Gas Processing Plant (OGPP). The plant was constructed in the period from 1971 to The design annual capacity of the plant was 45 bcm of gas and 6.26 million tonnes of unstable condensate and crude oil. The current-production capacity of the plant is 37.5 bcm of processed gas and 6.26 million tonnes of unstable condensate and crude oil per year. The gas processing plant consists of 3 primary and 13 secondary units. Each primary unit is a separate production facility including a set of process plants. The integrated plant provides a broad range of hydrocarbon processing services. The principal commercial products of the integrated plant are as follows: - dry gas; - liquefied petroleum gas; - stable condensate and crude oil; - natural gas liquids; - technical propane-butane; - ethane; 19

21 - helium (gaseous, liquid); - odorant; - sulphur (liquid, block, pellets); - liquid oxygen; - liquid nitrogen. Figure 3. Process flow chart of the Orenburg Gas Processing Plant 1 st &2 nd phases Acid gas Claus process Sulphrene Flue gases Sulfur Natural gas Amine desulfurization Condensate Low-temperature separation (drying) Stabilization Separation gas Gas Очистка treatment газа Natural gas liquids package Product gas Natural gas liquids Stable condensate 3 rd phase Acid gas Claus process Sulphrene Flue gases Natural gas Desulfurization Low-temperature separation Condensate Oil sweetening Sulfur Deethanization gas Product gas Stable condensate Propane-butane fraction Caustic treatment Drying Liquefied gas Source: Gazprom The Orenburgskoye field is the primary supplier of hydrocarbon feedstock (more than 18 bcm of gas and about 500 thousand tonnes of hydrocarbon liquids per year) processed by the integrated plant. Over 7 bcm and about 3 million tonnes of condensate are supplied from the Karachaganak gas condensate field in Kazakhstan and up to 435 thousand tonnes of crude oil are delivered by other companies from fields in the Orenburg region. Cooperation with Kazakhstan in the processing of gas from the Karachaganak field began as early as After the breakdown of the USSR, the Karachaganak field ceased to be an asset of Orenburggazprom, but cooperation with the new owners from independent Kazakhstan was re-established. Since 1991, the level of gas supplies for processing at the Orenburg gas processing plant increased to 7 bcm in 2003 and to 8 bcm in In the future, it is planned to increase gas supplies from Karacahaganak to Orenburg GPP to 15 bcm per year. 20

22 OGPP s production capacity of chemical products is 14 thousand tonnes per year. Products are used by Orenburggazprom for internal purposes, for the needs of the city and the region of Orenburg and are sold to customers in the Volga-Urals region of Russia and to Northern Kazakhstan. Construction of polyethylene and polypropylene plants is currently being considered. The Orenburg Gas Processing Plant currently produces 450 thousand tonnes of propane fraction per year (the design capacity is 550 thousand tonnes per year) and 400 thousand tonnes of ethane fraction per year. The feedstock for production comes from the helium plant of Orenburggazprom. System for Transportation of Gas Produced by Gazprom Dobycha Orenburg Dry stripped gas from the Orenburgskoye field is supplied to the Unified Gas Supply System (UGSS) through the Soyuz, Orenburg-Novopskov, Orenburg-Samara and Orenburg-Zainsk pipelines. Gas from the field is primarily supplied to the domestic market. 21

23 Map 1. Transportation routes for gas produced by Gazprom Dobycha Orenburg to Volga- Urals region to Central Russia to Ukraine and Blue Stream/Turkey 22

24 Production Potential of Gazprom Dobycha Orenburg In the period to 2010, the production level of 18 bcm will be maintained due to the commissioning of GBS-3. However, after 2010 the Orenburgskoye field will show further production decline. Given considerable reserves of the field, the company is expected to maintain production from the field at the level exceeding 10 bcm until Figure 4. Production outlook for the Orenburgskoye field, 2007 to 2020, bcm Source: RPI research New Capital Investment The principal provisions of Orenburggazprom s «Strategy for Prospective Development until 2010» are as follows: 1. Production Maintaining the production potential of wells through well stimulation, commissioning of new GBS, squeeze cementing, liquidation of saline deposits; exploration and development of new fields; development of oil and gas condensate deposits of the Orenburgskoye field; geophysical studies; drilling of new exploration and production wells 2. Processing and gas chemical production Diversification of the product range, including reconstruction of helium units of the Helium Plant to increase ethane production; construction of polyethylene and polypropylene plants; reconstruction of the propane and butane unit of the helium plant. In addition, Orenburggazprom is currently exploring the possibility of supplying feedstock to the Orenburg Integrated Gas Chemical Plant from the new oil and gas fields of the Orenburg region 23

25 that have potential reserves of about 2 billion tonnes of oil equivalent. The company estimates that, taking into account the potential of these new fields, there is high probability of maintaining annual production at the level of 20 bcm of gas and more than 6 million tonnes of hydrocarbon liquids from 2010 to Capital expenditures required to support gas production from currently developed reservoirs of the Orenburg field for the period from 2008 and 2020 are estimated at USD 430 million. Outlook for Gas Price In the period from 2000 to 2007, Orenburggazprom s wellhead gas price has been at the level of about USD 20 per 1,000 m 3. Capital investments were primarily made in the 1970s and have left their payback period behind. Therefore, there was no considerable increase in production cost in the 1990s. Given that the production rate will decline almost two-fold by 2020, production costs can be expected to grow due to lesser economies of scale. Other important drivers behind production cost growth will be new capital expenditures in workover of current well stock, new phases of GBS construction and inflation in respect to such components of production cost as wage level and cost of energy. Table 1. Cost-plus* to the Ukrainian border and Dzhubga** (nominal USD per mcm) Transportation to Ukraine Wellhead price Transportation via Russia Kazakhstan transit (380 km), COST-PLUS, Ukraine border Transportation to Blue Stream Wellhead price Transportation via Russia Kazakhstan transit (380 km) COST-PLUS, Blue Stream entry * Wellhead price plus transportation cost excluding VAT and export duty **Blue Stream entry point The study features similarly structured profiles of other gas producing companies, as well as new gas fields and provinces: Yamal, Shtokman, Ob-Taz Bay, Eastern Siberia, Russian Far East. 24

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