WATCHING THE WORLD OMV AIMS FOR YAKUTSK GAS

with Roger Vielvoye from London Yakutsk autonomous republic in Central Siberia is not one of the prime targets for western companies seeking action in the Soviet Union. Modest oil reserves have been found, and there are potentially very large gas reserves. But the region lacks links into the main Soviet oil and gas distribution system. That has not deterred Austria's state oil company, OMV. It has agreed to a joint venture with the regional oil and gas company, Lenaneftegas Geologija.
July 8, 1991
3 min read

Yakutsk autonomous republic in Central Siberia is not one of the prime targets for western companies seeking action in the Soviet Union.

Modest oil reserves have been found, and there are potentially very large gas reserves.

But the region lacks links into the main Soviet oil and gas distribution system. That has not deterred Austria's state oil company, OMV. It has agreed to a joint venture with the regional oil and gas company, Lenaneftegas Geologija.

The joint venture involves two blocks. One covers 14,000 sq km, the other slightly fewer. Together they hold proved gas reserves of 10-14 tcf, along with some oil in complex structures.

WHAT'S PLANNED

Main objective of the joint venture will be to prove up more reserves that will boost the,Yakutsk region's present reserves of 28 tcf to the 42-52 tcf required to justify a 2,500 mile pipeline to Korea and Japan.

Yakutsk autonomous republic is five times the size of Texas but has only about 1 million inhabitants. They use about 60,000 b/d of oil products.

However, there is no local refinery. Products are imported from eastern Siberia, and some crude is burned directly. When harsh winters disrupt road and rail communications, products must be flown in at exorbitant costs.

To ease this supply problem, OMV could become involved in a project to build a 10,000-20,000 b/d topping plant. A feasibility study for the plant is not complete, but the locals hope it will be operational within 2 years.

OMV has long standing relations with the Soviet Union. It was the first western European country to sign a gas supply agreement with the U.S.S.R. in the 1960s and currently uses about 580 MMcfd of gas from the East with a further 1.5 bcfd of Soviet gas transiting Austria on its way to other European markets.

OMV established contacts with Yakutsk 3 years ago. The company was in discussions with Lenaneftgas Geologija long before other operators started to arrive on the scene. Other acreage is available, and data packages were offered for small areas but failed to attract significant industry interest.

OMV hopes the joint venture will be confirmed locally and nationally fairly quickly so exploration can get under way. The local company has a large amount of good quality seismic data which needs only some reprocessing. Drilling could begin early in 1992. Unlike companies planning to begin exploration in western Siberia, OMV will not face a host of environmental problems stemming from previous oil industry operations. The lack of widespread oil activity has left the landscape almost untouched.

PIPELINE POSSIBILITIES

Yakutsk gas reserves provide limited volumes of fuel for power generation, but the main market lies farther east. Since the Persian Gulf war, Far East gas companies have been looking for alternatives to Middle East gas supply. A line could be built directly to the Japanese and Korean markets.

Another marketing solution might be to run a pipeline to Sakhalin Island in the Soviet Far East, where Yakutsk reserves could supplement local supplies and tap into proposed gas pipeline links to Japan and Korea.

Development of Yakutsk reserves also might benefit Austria's gas market. OMV has established it will be possible to swap gas from Yakutsk for gas from the western U.S.S.R. that could be shipped to Austria.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.

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