No. 3, 2009

Oil of Russia magazine talks to Viktor Tolokonsky, Governor of the Novosibirsk Region

In contrast to most parts of Siberia, the intensive development of the Novosibirsk Region has historically been associated not with development of natural resources, but with its unique geographical position at the intersection of major transport routes. This has promoted a rapid population growth and concentration of production enterprises and infrastructure facilities. Over the last few years, the region's industrial wealth has been supplemented by an oil industry.

Q: How do you assess the role of the oil industry in the economy of the Novosibirsk Region?

A: For us, the oil industry is a new one, since production began in the Region only eight years ago. Before that, there were only geological surveying wells drilled back in Soviet times in the northwest of the Region, 500 km from Novosibirsk.

No serious interest was shown in our oil fields for a long time: in terms of hydrocarbon raw material reserves they were classed as minor ones, not worthy of any attention.

The biggest - the Verkh-Tarskoye, with geological reserves of 68 million tons of oil and commercial reserves of 32 million tons, was discovered in 1970. Its industrial development began in 2000, when only 31,000 tons of oil were produced. Over the next three years, this figure literally stood still and only since 2003 has there been a sharp growth. This field, worked by Novosibirskneftegaz-prom (which belongs to TNK-BP), now provides 50% of the total oil produced in the region.

Recently, another 9 hydrocarbon fields have been discovered, with resources estimated variously, the maximum being between 250 and 500 million tons, including commercial reserves of from 30 to 70 million tons and 110 billion m³. This quantity is more than enough to last for the next 10 years. And considering that the territory of the Region has still not been studied thoroughly, new discoveries in the future are not only possible but inevitable.

Last tear, Novosibirskneftegaz produced 2.077 million tons of oil and its assets now include, in addition to Verkh-Tarskoye, another five fields - the Mezhovskoye, Vostochno-Mezhovskoye, Rakitinskoye, Chekovskoye and Bochkaryovskoye. Of these, the Rakitinskoye is already being developed and the company plans to achieve even higher figures this year as a result.

Another of our companies is also expanding production - Severnoyeneftegaz, which also belongs to TNK-BP. It already has over ten operating production wells and, although production of oil is still not all that high here - less than 140,000 tons in 2008 - even this figure is almost quadruple the 2007 output.

Severnoyeneftegaz carries out its main work on the Maloichskoye and Vostochno-Tarskoye oil fields located in the north of the Novosibirsk Region. In spite of the deteriorating situation on the market and significant drop in oil prices, the company plans to sell over 145,000 tons of crude this year.

It is transported via the Transneft trunk pipeline system from the fields of the TNK-BP subsidiary structures, meaning that, in the future, production levels can be increased while production costs continue to be cut. So, once again, the prospects for the Novosibirsk oilmen's future are favorable indeed. By the way, the planned production for 2010 is over 3 million tons.

Finally, three years ago, another natural resource user appeared in the Region - Surgutneftegaz, which won the tender for the right to develop the Zarechnoye field (with forecast oil reserves of 37 million tons). This is probably further proof of the growing interest in the Novosibirsk oil industry.

Q: To what extent does the administration of the Novosibirsk Region focus on development of oil refining capacity?

A: I believe that, given our remote location with respect to the industrial centers of the developed countries, we should concentrate on science-intensive, modern enterprises that do not require large numbers of staff and are not fraught with any environmental risks.

Even so, we are building mini-refineries and one of them is in operation already. It is situated in the Kochenyovo regional center, not far from Novosibirsk. The construction was financed fully by private investors and it today refines about 200,000 tons of oil a year from crude delivered from the Verkh-Tarskoye field. The final product, consisting of gasoline, diesel oil and black oil, is in considerable demand among agricultural producers and other consumers.

We have now, for instance, started implementing a unique new project - construction of a mini-refinery in the Barabinsk-Kuybyshev zone. This is the first of its kind in Russia - it will use a special oil refining technology developed by our own scientists. The Transneft oil and petroleum products pipelines and the Trans-Siberian Railway run close to the plant, meaning that it will have additional advantages for selling its output.

The new technological solutions on which the mini-refinery is based have already been tested abroad: the patent to them has been purchased by many countries, including the USA. A similar plant built in Poland is already operating successfully.

Although the capacity of the new refinery will not exceed 1 million tons of oil a year, its efficiency per ton of crude refined will be significantly higher, virtually without any environmental risks. The refinery will engage in deep refining of oil and will produce EURO-4 standard gasoline.

The new mini-refinery will treat Novosibirsk oil, for which purpose a supply agreement has already been concluded with TNK-BP.

Q: The Novosibirsk Region is valued for its scientific potential. Which of its achievements in the oil refining sphere have proved to be most significant and in the greatest demand?

A: There are innumerable innovative projects. For instance, one promising direction in oil refining is production of high-octane unleaded gasoline using

zeolite catalyst technology, these catalysts already being produced at the Novosibirsk chemical concentrates plant.

The experts believe that this technology is capable of revolutionizing the refining process. According to the traditional system, after preliminary distillation of the oil, the gasoline, kerosene and diesel fractions are processed separately, undergoing different stages. Thanks to the new technology, the refining process has become much simpler: such complicated and expensive processes as hydrofining, reforming, isomerization, alkylation, dewaxing and several stages of rectification are no longer required. As a result, capital expenditures are cut to a sixth and operating costs to at least an eighth. In terms of power consumption, the new technology is at least four times more economical than the traditional one.

The Siberian Branch of the Russian Academy of Sciences is working on developing and introducing an energy-saving technology in the sphere of oil and petroleum products pipeline transportation. Its subsequent implementation will promote an increase in the carrying capacity of an oil pipeline transporting high-viscosity and high-wax oils, a reduction in pressure differentials in the operating part of the pipe (this helping make the pipeline more reliable), and will also make it possible to pump the oil with intermediary pumping stations switched off (resulting in lower energy expenditure).

In general, the Siberian Branch of the RAS is working on developing a multitude of diverse, promising technologies in the sphere of oil production and refining. Even so, oil and gas projects are the main but only one component part of the big "generator of innovative ideas" that is to be created in the region under the government Strategy for Socio-Economic Development of the Region up to 2025.

The research potential of the Siberian center of science will help both generate breakthrough technologies in the sphere of oil and gas production and refining and implement them successfully in practice.

Siberia's future lies in an innovative economy of a new type, based on the latest achievements of scientific and technical progress and with a social orientation. This is the goal toward which we are working today.