No. 2, 2010
Sergey Donskoy
,
Deputy Minister for Natural Resources and Ecology of the Russian Federation
GEOLOGICAL PRIORITIES
Russia’s strategic task in the first quarter of the 21st century is to build up its mineral resources base
At the beginning of this March, the Ministry for Natural Resources presented to the Government of the Russian Federation a draft Strategy for Development of the Geological Sector for the period up to 2030. The Strategy was aimed at forming a competitive geological sector to provide for an effective buildup, reliable protection and sustainable use of Russia's mineral resources.
Strategic goals
The Energy Strategy of the Russian Federation for the period up to 2030 (ES - 2030) sets the task of raising oil production to 535 million tons and that of gas to 930 billion m3 per annum. In order to achieve these results, appropriate work is needed - geological exploration of the country's territory and adjacent water areas. The specialists believe that, in order to attain the goals set in the Energy Strategy, a three to four-fold increase is required in the volume of geological exploration, so the Ministry for Natural Resources and Ecology of the Russian Federation has also developed a Strategy for Development of the Geological Sector for the Period up to 2030. The document has been executed to support implementation of the Concept for long-term socioeconomic development of the country up to 2030.
The key task to be faced by the geological sector in the first quarter of the 21st century is to enhance the investor appeal of geological exploration. The Strategy priority is to improve target planning, the principles for placement and fulfillment of government orders, the management system, and government geological control.
The Strategy's main directions are to lower administrative barriers and develop a system for providing information, analytical, scientific, technical and human resources support for geological exploration efforts.
To optimize the organizational structure of the geological sector, the plan is, first, to specify the functions and areas of responsibility for the public and private segments of the sector. Depending on the type of minerals, the area under geological exploration and other factors, the dividing line between these may shift.
In the sphere of replenishment of hydrocarbon reserves, the government's contribution will be restricted to the regional stage of exploring new oil- and gas-bearing provinces (scientific research, sinking of parametrical wells, geophysical work, including seismic studies on a regional scale). Detailed geophysical work, including preparation of promising structures for drilling, as well as exploration drilling per se, should fall within the terms of reference of the oil and gas producing companies and be financed by them.
Cluster approach
One of the key provisions of the document consists in using a cluster approach to improving target planning.
A mineral industry cluster is understood as a set of production targets linked by a common infrastructure and having a single shipment point for the feedstock produced or washed/refined products into a federal or regional transport system (railroads, pipelines, sea transport) for delivery to the consumers. In other words, it may be called a technological hub of mineral production.
The cluster approach will allow mineral reserves to be studied within the natural bounds of minerogenic provinces and permit planning and organization of resource base development in consideration of the possibilities of the transport and power infrastructure and the human resource potential of the territory, irrespective of administrative and territorial divisions. In this connection, the functioning of a cluster will be determined by a combination of several policy documents: regional development patterns - by regional level programs; sectors of industry - by departmental documents.
It is proposed to make mineral industry clusters the basis for building a regional infrastructure framework, which will provide for sustainable development of constituent entities of the Russian Federation focused on use of mineral stock.
Development of geological exploration programs and medium term licensing procedures, in conjunction with plans for the socioeconomic development of territories, will promote coordination of the activities of government agencies, regions and interested businesses.
Geological exploration programs financed from the budgets of the Russian Federation and its constituent entities, as well as natural resource users, will be agreed for each cluster.
It is proposed that licensing programs will be developed for a period of up to three years, provided the following conditions and principles are observed: maintenance of the mineral reserves replacement to production ratio within the bounds of a mineral industry cluster; use of tender (auction) mechanisms for granting subsoil use rights with due regard for the possibility of holding tenders for subsoil sectors that are in close proximity to one another and contain small and medium-sized mineral deposits within the scope of a single lot; consideration of federal and regional socioeconomic development programs and potential adjustment thereof; protection of the geopolitical interests and economic security of the country.
Government support for the geological sector
The key provision of the Strategy is reform of the sectoral facilities management system. In particular, it is planned to create Rosgeologia on the basis of scattered production and scientific-production organizations, with 100% of the shares in this company belonging to the government. It will include budget-financed information and expert organizations, including geological funds; specialized institutes engaged in research and analysis; production and scientific-production geological organizations.
Rosgeologia will be able to ensure technical performance of geological prospecting work that the government needs to have carried out at the early stages of the geological survey process. The holding company is to be structured by type of work and region in such a way as to ensure that the territory of the country and adjacent water areas are evenly covered by prospecting operations to maintain the requisite level of the exploration maturity of the country. Rosgeologia will also include companies specializing in offshore exploration.
For assessing the progress of Strategy implementation, a system of target indicators has been developed on the basis of three criteria - enhancement of the exploration maturity of a territory; replenishment and sustainable use of mineral resources; degree of protection against hazardous geological processes and phenomena.
As far as the first indicator is concerned, it is calculated as the sum of the base value (in %) and the increase in the exploration maturity of the country's territory, continental shelf and internal seas as a result of regional geological-geophysical, geological survey, hydrogeological, deep geoscience research and special purpose work. In 2008, for instance, this indicator stood at 41%, while it should reach 43.6% in 2010, 50% in 2015, and 60% in 2020.
The level of mineral resources replenishment is calculated as the ratio of the annual increment in mineral reserves of category ABC1 to their total production. During the period up to 2030, simple replenishment will be ensured for the main type of mineral resources, i.e., the reserves increment will roughly equal the amount produced.
Oil field development sustainability is assessed according to the oil recovery factor. In 2008, it stood at 30% and is expected to reach 32% by 2015, 35% by 2020 and 37% by 2030. Another important criterion is the associated gas utilization rate: it was 74% in 2008, and should reach 85% in 2010 and 95% in 2012.
The exploration maturity of regions subject to the impact of hazardous geological factors and phenomena must also be increased. This indicator is calculated as the sum of the base value in percentage terms and the increase in the exploration maturity of territories where hazardous endogenous and exogenous geological processes develop, as well as sectors where ground water is polluted. In 2008, this indicator stood at 54.4%; in 2010 it will rise to 56.4%, in 2015 to 80%, in 2020 to 85%, and in 2030 to 95%.
The measures envisaged by the Strategy will be funded out of the federal budget, the budgets of constituent entities of the Russian Federation and extrabudgetary sources. At the same time, several mechanisms are proposed to increase the efficiency of financial performance. The ratio of budget funds to other sources will be 1:20-1:25 for hydrocarbons and 1:1-1:10 for fossil minerals, depending on the region and the type of raw material.
An effective management system will be set up to implement the Strategy. Government agencies will have to submit interim reports on target indicators actually achieved for development of the geological sector, on the problems and risks involved, and on measures taken to overcome them.
The Ministry for Natural Resources and Ecology of the Russian Federation will be responsible for coordinating implementation of the Strategy. Its tasks are to establish a system for monitoring and evaluation of the results achieved, provide the government with consolidated reports on and proposals for optimizing the complex of measures and funding of them.
Overall, it may be asserted with confidence that implementation of the Strategy for Development of the Geological Sector for the period up to 2030 will restore Russian geology to the important and deserved position from which it was toppled as a result of errors made in the past.
