No. 3, 2004

Dmitry Gurtovoy


LUKOIL starts drilling at the Kravtsovskoye (D-6) offshore field in the Baltic

On March 2, 2004, LUKOIL spudded development wells at the Kravtsovskoye (D-6) offshore oil field in the Baltic Sea. That is an event of significal importance for Russia as well as for the Kaliningrad Region.

Looking back

Kaliningrad's oil industry is almost half a century old. The first oil prospecting parties arrived there in the mid-1950s, and the first oil field, Krasnoborskoye, was struck in 1968.

On September 8, 1972 the Kalinin-gradneft Oil and Gas Production Division (OGPD) was established. That was when the oil industry of the Kaliningrad Region had its start. It took the Krasnoborskoye oil field slightly over two years to go on commercial production - in February 1975, the first trainload of oil was shipped to market from Znamensk station's service rack, and another two years later oil production hit the one-million-ton mark.

In 1978, the Kaliningradneft OGPD was transformed into the Kaliningrad-morneftegazprom production company as part of launching the Baltic shelf oil and gas development project. In 1983, the Kravtsovskoye (D-6) offshore oil field was discovered. In 1994, the company was incorporated. In the following year, JSC Kaliningradmorneftegaz was affiliated to LUKOIL and renamed JSC LUKOIL-Kaliningradmorneft in 1999.

Over 30 years of its operations in the Baltic region, the Company has sunk more than 400 wells and discovered 25 fields (23 onshore and two, offshore), laid more than 350 km of pipelines, set up oil treatment stations, a technical maintenance center, an integrated oil terminal, a liquefied gas filling station, and many other facilities. Over 29 mln. tons of oil have been produced over the period. The new lines of LUKOIL-Kaliningradmorneft's activity include oil and petroleum products transshipment via the Izhevskoye integrated oil terminal and expansion of the gasoline filling station network in the Kalinin-grad Region. Thirty such stations are already operational. Besides, the Company is constructing a network of gas filling stations of which 7 have already been completed.

A man-made island at sea

LUKOIL-Kaliningradmorneft takes pride in having put the Kravtsovskoye (D-6) offshore oil field on commercial production.

The field is 22.5 km off the Kaliningrad Region coast. It contains an estimated 21.5 million tons of C1+C2 geological oil reserves and 9.1 million tons of recoverable oil. It is planned to drill 27 wells there to bring output to 600,000-650,000 tons per year within three to four years of the production start-up scheduled for this summer.

The field is expected to be at its productive peak for 12 years out of its 30-35-year useful life.

The D-6 field's ice-resistant offshore platform constructed by LUKOIL-Kaliningradmorneft's steelworks and designed for the simultaneous drilling and operation of producing wells is worthy special mention. This first 100 percent Russian-designed and Russian-constructed production platform is the world's one and only in its class.

The platform rests on two supports, one of them housing 75-bed accommodation quarters and topped with a helicopter pad, and the other intended for the key operation modules: drilling and production, compressor and pumping, power plants, storage facilities, tanks and sites, supply and communication lines. The supports, 70 m apart, are interconnected by a bridge crossing intended as a walkway and the underlying bed for cable routes and in-site pipelines. The accommodation quarters are located safely away from the "works".

The crude recovered by the platform from the offshore pool will be conveyed to shore via a 47-km subsea pipeline and proceed to the Romanovo oil-gathering station through a ground-surface pipeline whereupon it will be conditioned to the marketable state, piped to the Izhevskoye integrated oil terminal and loaded into tankers. Designers took great pains to make the project environment friendly. The production processes on board the platform will be carried out on the "zero discharge" principle meaning that all industrial and domestic waste will be taken away to shore and disposed of there. The Company has a previous experience of acting in such an environment-conscious way while developing a Caspian offshore oil field from the Astra jack-up floating drilling rig, with the local marine environment left practically intact as a result.

When operating its Baltic offshore oil field, the Company uses a reliable environmental monitoring and control system and sticks to the "zero discharge" principle it used in the Caspian.

Off to a good start

LUKOIL started development drilling at the Kravtsovskoye (D-6) oil field on March 2, 2004. The inauguration ceremony was attended by Ilya Klebanov, RF President's envoy in the Northwestern Federal District, Vladimir Yegorov, Governor of the Kaliningrad Region, and Vagit Alekperov, President of LUKOIL. That was no mere formality - the Government attaches paramount social and economic importance to the development of Russia's northern offshore oil fields. "There emerged on the map of Russia a new oil-bearing region the development of which will make a substantial contribution to the economic advancement of the North-western Federal District and stimulate oil production growth in Russia", President Vladimir Putin stated in his telegram of congratulations to LUKOIL's personnel.

Indeed, the D-6 field's development will bring considerable social and ecological benefits to the Kaliningrad Region which has found itself isolated from Greater Russia after the breakup of the USSR.

The export of the oil produced at the field will add to the aggregate exports of the Russian exclave and improve its foreign trade balance. As a result, it will draw more investors from other parts of Russia and from abroad, which, in its turn, will be conducive to the further improvement of the social and economic situation in the region. Industrial production there will grow. The development of the D-6 field will double the Region's oil production. This is a positive factor today because the oil industry compares favorably with most other sectors of the economy for stability.

An increase in tax revenues and the influx of investments will make it possible to spend more on the construction of social welfare institutions and on improving the quality of life. "We are proud that our Company has succeeded in carrying out this unique project which will strengthen Russia's positions in the Baltic region", Vagit Alekperov, President of LUKOIL, commented. "LUKOIL has demonstrated once again that Russian oilmen wield state-of-the-art technologies and are capable of achieving impressive results".

In the focus of international attention

The Baltic with its popular seaside resorts is a unique ecosystem, and the construction of the D-6 oil platform could not but raise concerns in the Baltic countries. In order to reassure those apprehensive of the project's impact on the environment, oilmen entered into an active dialogue with various international organizations last October.

To begin with, LUKOIL-Kaliningrad-morneft submitted a report on the project to a Lithuanian government delegation. Lithuanian ecologists perused project specifications for three days, visited the platform and, on October 15, signed a report on their findings jointly with the LUKOIL-Kaliningrad-morneft managers. The parties voiced their concern over the ecological condition of the Baltic. They came to the conclusion that it was necessary to work out a plan of joint emergency actions to be taken in the event of a transboundary oil spillage in the Baltic, and emphasized the need for joint environmental quality monitoring with a view to keeping up-to-the-minute with any developments that may affect the ecology of the Baltic and local nature preserves. The parties expressed their satisfaction over the results of the meeting. In conclusion, head of the delegation Raimondas Sakalauskas, Deputy Director of the Environment Quality Monitoring Department under the Ministry of the Environment of Lithuania, commented: "The impressions of the visit and of on-the-spot inspection turned out to be better than expected - the Russian side has opted for the safest possible oil field development techniques and processes". Raimondas Sakalauskas also pointed out that Russian experts "have done a good job of estimating the degree of risk".

Right after the Lithuanian experts' visit to Kaliningrad, Prime-Minister Algirdas Brazauskas of Lithuania met with LUKOIL President Vagit Alekperov in Moscow on October 20. "Lithuania has changed its mind about the Russian offshore oil field development project in the Baltic being an environmental hazard", the Prime-Minister said. "Lithuania has no right to bring any pressure to bear on Russia", he added, "because Russian territory is in question". At the same time, he pointed out that "guaranteeing maximum safety in this region is of vital importance".

The Lithuanian-Russian dialogue had hardly come to a close when Kaliningrad oilmen submitted information about their project to experts representing the UN ad hoc expert group on water and industrial accidents, which met in Svetlogorsk outside Kaliningrad last fall. The Federal Committee for Industrial and Mining Safety Supervision (Gosgortekh-nadzor) instructed LUKOIL-Kaliningrad-morneft's experts to inform the UN delegation about their readiness to cope with any accident that might occur in the process of D-6 project implementation.

Late last year, the sea pollution control group of HELCOM Р the Helsinki Baltic Marine Environment Protection Commission embracing all the coastal states of the Baltic Sea - met in St. Petersburg for its third session. The group meets regularly as a matter of routine to discuss specific safety-related situations in the Baltic, to get up-to-date with the latest developments, to work out proposals that form the basis of the HELCOM Recommendations for the commission member-states. Being Russia's only company to start producing oil from an offshore field in the Baltic shortly, the Company was requested to make a report on the D-6 project. Olga Pichuzhkina, Head of the Environment Protection Department of LUKOIL-Kaliningradmorneft, told European experts about the measures taken to ensure the D-6 project's safety. The information submitted by LUKOIL-Kaliningradmorneft was recorded in the session's minutes. "Now I am certain", Mr. Thomas Fago, the Group's Chairman (Sweden), summed up his conclusions, "that there will be no flowing-well danger to the Baltic Sea area".

On May 20, 2004, French Senator Daniel Goulet, a representative of PACE, paid a brief visit to Kaliningrad where he met with the LUKOIL-Kaliningradmorneft management, representatives of federal and local government agencies, members of the Kaliningrad Region Duma and journalists. The PACE inspector received exhaustive information about the Company's operations on the D-6 oil field, on the high standard of the project's ecological and production safety, about the measures taken to prevent and eliminate oil spills and on a continuous marine environment quality monitoring of the Baltic Sea in the D-6 area. According to Daniel Goulet, LUKOIL-Kaliningradmorneft managers and the Governor of the Kaliningrad Region convinced him that every precaution had been taken and every accident-preventive arrangement made. "Now we PACE representatives see that LUKOIL is very much environment-conscious", Daniel Goulet said.

The idea of the Kaliningrad-2004 international rescue exercises carried out on June 23, 2004 in which LUKOIL-Kaliningradmorneft took an active part, was to disprove the allegations that the LUKOIL's projects posed a threat to the environment. The exercises enacted a disaster scenario whereby the platform is seized by terrorists and set on fire with the ensuing catastrophic consequences, such a major oil spill. International rescue, army and firefighters' units neutralize the terrorists, put out the fire, save hostages and skim the oil spills off. More than a thousand firemen and rescuers representing NATO and EAPC (fire brigades and rescue teams from Poland and Lithuania) and Russia's ESM took part in the exercises. LUKOIL-Kaliningradmorneft practiced the oil spill eliminating procedure: set up oil booms, skimmed oil spills off the sea surface and disposed of them. LUKOIL's three special-purpose vessels - the Kembry, the Balkhan and the Tsarevsky - equipped with fire-fighting and oil spill skimming facilities were active in the exercise area. Besides, oilmen helped the rescuers along with transport vessels. The progress of the exercises was monitored by observers and journalists from 22 countries.

The exercises over, Sergey Shoygu, the Russian Federation Minister of Civil Defense and Emergency Situations, told at press conference that the exercises had proceeded as planned and that he was pleased with their results. "We have informed all the Baltic states about our project and about the safety measures we had provided for. From now on this will be standard practice, I think. We are prepared to submit detailed reports to our colleagues and neighbors", Olga Pichuzhkina said summing up the results of that impressive international action she had taken an immediate part in.

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Oil of Russia, No. 3, 2004
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