No. 1, 2010

Development of the major gas fields of the Yamal Peninsula is of strategic significance for Russian’s economic growth

The hydrocarbon resources of the Yamalo-Nenets Autonomous Area have, for several decades now, been providing for the energy security of the Russian Federation, constituting the necessary base for further development of the country's economic complex and for stable growth of its export potential.

Energy beyond the Arctic Circle

On the Yamal Peninsula and in adjacent water areas, 11 gas and 15 oil and gas condensate fields have been discovered, their explored and inferred gas reserves (АВС1+С2) being some 16 trillion m3, and potential and forecast resources (С3-D3) about 22 trillion m3. The reserves of condensate (АВС1) reach 230.7 million tons and those of oil 291.8 million tons.

The licenses to develop the Bovanenkovskoye, Kharasaveyskoye, Novoportovskoye, Kruzenshternskoye, Northern Tambeyskoye, Western Tambeyskoye, Tasiyskoye and Malyginskoye fields belong to Gazprom. The most significant Yamal field in terms of (АВС1+С2) reserves is the Bovanenkovskoye (4.9 trillion m3). In accordance with the project, by 2030, over 300 billion m3 of gas will be produced there per annum.

It is noteworthy that on these territories operation of resources is essentially complicated by severe environmental conditions, as well as by absence of the developed industrial, transport and social infrastructure. Therefore it is necessary to commensurate economic expenses for realization and benefits from these projects. Besides, estimating expediency of the accelerated development of gas deposits of the Yamal peninsula, it is necessary to measure possible losses from delay of the process of their development. Thus, as the share of the Russian gas directed for exports, is great enough, the world market conjuncture of "blue fuel" is taken into consideration.

On the basis of optimizing interbranch inter-regional model scenarios of development of the economy of Russia are figured out in advance: the variants of the accelerated and slowed down development of resources of the Yamal peninsula in situations of the maximum and reduced exports are compared. The aim is to find out, how much new projects of the gas industry are significant for the country national economy, what consequences in store for us are, if development of the gas fields will be going on slowly. Will the total product of the gas industry decrease thus, or will there be a possibility to produce necessary volumes of "blue fuel" in other regions of Russia? Besides, instability in the sphere of exports of gas demands to look for ways of adaptation of the Russian economy to the adverse situation on the foreign market.

The Yamal fields can bring both profits to companies and revenues to the government but creation of a production, transport and social infrastructure there is fraught with substantial difficulties and requires enormous financial resources. So, it is virtually impossible for these projects to be implemented by the private sector alone. At the same time, the federal and regional authorities have an important part to play, since assistance or otherwise by the government machine may have a significant impact on development of these northern territories. Today, the oil and gas projects on Yamal are being implemented under the auspices of the biggest government-owned company - Gazprom.

So, Russian specialists have been set the objective of selecting the optimal scenario for government action in the north to benefit all the stakeholders (the federal center, the regions, companies and the public) and meet certain quality requirements.

Under various scenarios for Russian economy' development, gas production on Yamal might reach, by 2030, from 150 to 300 billion m3 a year. At the same time, the Russian Federation Energy Strategy provides for annual gas exports reaching 300 billion m3 by 2030. If, however, an unfavorable situation were to arise (in connection, for instance, with refusal by counterparties to buy Russian hydrocarbons), exports might constitute 220 billion m3 of gas a year. Mathematical economics tools can be used to calculate the key macroeconomic indicators for these scenarios.

The wealth of Yamal

Let us note that in terms of their size Yamal reserves may be rightly called unique on a global scale. All the Eastern Siberia alternative projects are not really competitors to Yamal gas - the existing and already developing infrastructure on the peninsula, as well as the volume of reserves in place, make these resources incomparable. Yet, even though the Russian economy's demand for gas is quite high, delayed development of the Yamal fields entails the need to involve other gas fields in the country in active turnover: in Eastern Siberia, on the shelf of the Barents Sea, in Yakutia and on Sakhalin.

The gas complex of the Krasnoyarsk Territory, represented primarily by the fields in the Evenkia Municipal District, is marginal, being highly sensitive to changes in policy in relation to development of the Yamal fields and to export prospects. The delay in developing the hydrocarbon wealth of the peninsula under the conditions of maximum export liabilities predetermines the need for accelerated startup of the Yurubcheno-Tokhomskoye and Sobinskoye fields in southern Evenkia. Here, however, additional costs are associated not only with the difficult conditions for developing the gas fields, but also the high costs of related industries, such as rail and motor transport in the Krasnoyarsk Territory.

Faster development of Yamal (even if gas exports drop) will allow a more fundamental approach to be taken to the problem of developing the Evenkia fields, which are hard to access in both geological and technical terms. The opportunity will appear for selecting more carefully the location of a future gas chemical plant, developing a regional planning project, identifying the most suitable areas for permanent residence of the population under such difficult climatic conditions. It will be worth applying the experience of developing the Kovyktinskoye field in relation to resolving the problem of recovering helium, its presence being, after all, characteristic of many gas fields in Eastern Siberia.

Faster growth of the gas industry in the Yamalo-Nenets Autonomous Area through more active development of the Bovanenkovskoye and neighboring fields will thus open up new opportunities for both Siberia and the whole of the Russian Federation.

The analysts should now assess the risk of partial refusal by foreign partners to buy Russian gas (which might result from other fuel sources becoming available or from choice of other suppliers for political reasons). At this point, it should be remembered that there are grounds for considering the eastern direction to be the most stable. The fact is that many countries of the Asia-Pacific Region are demonstrating an interest in and readiness to cooperate with the Russian Federation in the sphere of hydrocarbon supplies. For this reason, a need will inevitably arise to seek new export routes.

A powerful impetus

The interindustry approach has made it possible to trace certain chains of changes complying with different situations on the world and domestic gas markets. For example, maximum gas production on Yamal, being a factor holding back development of the Krasnoyarsk Territory gas complex, at the same time provides an impetus to accelerated creation here of timber processing and pulp-and-paper production facilities. This is connected with the shortage of both human resources (with due regard for their substitutability by industry) and transport and energy complex capacity.

Yet in the Tyumen Region, given favorable gas export conditions, it would be preferable to develop the electricity sector and oil refining. This would make it possible to increase energy flows to the Urals, the Volga area and Central Russia, which, in turn, would promote progress of other branches of the national economy and, ultimately, a rise in the value of the end product (GDP) in the country by 700 billion rubles.

Russia's economy is capable of adapting to a cut in gas exports, too. This would even lead to a GDP rise by 1.5-1.7 trillion rubles and economic growth by 0.18-0.23 percentage points. The reason for this is that a drop in export revenues from gas sales abroad would entail a fall in imports and, consequently, faster development of import-substituting industries (above all, consumer industry). In other words, a prediction of difficulties in relation to exports would create a timely growth stimulus to the national economy, but in other regions - mainly the European part of the country and the Urals.

The need for faster development of engineering and provision for the growing demand for construction in the Far East is explained by the analysts by the exhaustion of certain possibilities in the European part of Russia and the Urals "to assist" other parts of the country. After all, their own needs for the output of these industries have also gone up, so the regional engineering complex is receiving an economically justified stimulus to "move East", a major role in this being played by the accelerated development of the Yamal fields.

It is now obvious that rational development of the hydrocarbon resources of the Yamal Peninsula might serve as the jumping-off point for developing the water areas and the shores of the seas of the Arctic Ocean - strategically important regions from the point of view of providing for the energy and national security of the Russian Federation.