RUSSIAN-U.K. COMBINE SLATES OIL PRODUCTION

Oil flow is to get under way this year from a project billed as Russia's first new field development project since the 1917 revolution to involve a western partner. A pipeline portion of the project also is claimed to be the first modern western oil pipeline built in Russia. Siberian OH Corp. (Sinco) and partner Eurosov Petroleum Ltd., London, are to begin production in from Yuzhnoye oil field, less than 40 km from giant Samotlor oil field in western Siberia.

Feb. 16, 1993

3 min read

Oil flow is to get under way this year from a project billed as Russia's first new field development project since the 1917 revolution to involve a western partner.

A pipeline portion of the project also is claimed to be the first modern western oil pipeline built in Russia.

Siberian OH Corp. (Sinco) and partner Eurosov Petroleum Ltd., London, are to begin production in from Yuzhnoye oil field, less than 40 km from giant Samotlor oil field in western Siberia.

Sinco and Eurosov are 70-30 partners in a plan to develop reserves of 1.7 billion bbl in 24 oil fields in a 400 by 400 km area of western Siberia southwest of the Ob river.

"A unique combination of western and Russian technology and financing is allowing rapid development of Yuzhnoye field," said Sergei Shafranik, Sinco director general. "In western terms the combined expenditure would approximate $35 million."

PRODUCTION

Yuzhnoye is expected to produce 10,000 b/d of oil by the end of the year from reserves of 120-150 million bbl. Seventeen production wells are to be drilled this year. Sinco expects 1993 production to total 2.3 million bbl, rising to 4.2 million bbl in 1994.

Yuzhnoye field was chosen for first development because it is the most advanced and closest to infrastructure. Development will involve completion of a $16.25 million link to the Russian gas grid.

"Yuzhnoye is seen as a locomotive for cash flow to develop other fields in the Sinco portfolio," said Kevin Burke, Eurosov chief executive. Development costs for fields in the region were put at $1-2/bbl.

"Crude oil from Yuzhnoye is not heavy," said Sinco Pres. Oleg Yakovlev. "We expect it will hold its own in the market." Yuzhnoye oil is 37 gravity sweet crude, slightly above the norm for the area.

Prime candidates for later development are a cluster of 10 fields and one prospect within relatively easy reach of the Yuzhnoye pipeline. These are the Malo-Yuganovskoye, Achimovskoye, Chistinnoye, Nezhdannoye (prospect), Yermakovskoye, Orekhovskoye, Ledyanoye, Yuzhno-Kinyaminskoye, Biryuzovoye, Severo-Poludennoye, and Tynkulskoye fields.

Four fields have produced off in small volumes, but they await full development. Eurosov said the fields are effectively virgin. Although Sinco holds rights for 24 fields under the old Russian legislation, all but Yuzhnoye's rights have to be cleared through the new bureaucracy.

PIPELINE

Development of Yuzhnoye involves completion of a 65 km pipeline to join a trunk line near Nizhnevartovsk. The line ties into Russia's pipeline grid, ultimately leading to Baltic and Black Sea export terminals.

The first stage of the 65 km pipeline will be completed during the spring thaw in May. Capacity of the line will be 40,000 b/d of oil. It is to be laid by Henuset Pipeline Construction Ltd., Calgary.

One reason for choosing Henuset, said Eurosov, is that this part of western Siberia is like northern Alberta in its climate. Henuset has Alberta experience and has developed specialized equipment to dig pipeline trenches and and bury lines through frozen terrain and rivers.