MOSCOW. (Igor Tomberg for RIA Novosti.) - Mineral resources accounted for over a half of the Russian budget revenues in 2004 and 70% of exports. Hydrocarbons make up 77% of mineral exports and solid raw materials the remaining 23%, with the biggest revenues earned from the export of aluminum, nickel, uranium, platinum metals and iron ores.
Siberia has been the main source of this wealth since the times of Peter the Great (18th century), and Russian geologists say that the bulk of mineral production growth, primarily of hydrocarbons, will be ensured by the development of West Siberia, especially its northern regions, and the Polar Urals. West Siberia and the Urals have 69% of Russia's oil and 66% of gas reserves. Oil and gas produced there make up 67% and 92% of the national output respectively. The Urals region is also rich in bauxites, iron, chromium and zinc.
The Russian government shares this view, which is why Prime Minister Mikhail Fradkov has held a national conference on the development outlook in the oil industry in Khanty-Mansiisk, the capital of the Khanty-Mansi Autonomous Area.
The agenda of the conference included debates on the implementation of the Industrial Urals-Polar Urals program in view of the growth of the area's oil and gas sector, as well as issues of stimulating hydrocarbons exploration. The government delegation visited the Priobskoye oilfield, the biggest in West Siberia with the status of "a special mineral use zone." A total of 20.4 million tons of oil was produced there last year and the output should grow by 5.7% in 2005.
Yugra Governor Alexander Filipenko, who hosted the conference, told the audience about the main socio-economic indicators in the Khanty-Mansi area. He said that 270 million tons of oil would be produced this year, which is 5.5% more than in 2004. At the same time, the volume of explored oil reserves has grown by only 50 million tons.
Yuri Neyolov, the Governor of the Yamalo-Nenets Autonomous Area, said that Yamal was the second-biggest Russian oil and condensate producer after the Khanty-Mansi area. Sibneft-Noyabrskneftegaz and Rosneft-Purneftegaz are the largest of the 17 oil companies working there; they produce 94% of the area's oil output. Last year, 42.2 million tons of oil and 10.4 million tons of condensate were produced in Yamal. Experts say that the annual production of liquid hydrocarbons (oil and gas condensate) in Yamal may reach 90 million tons within 20 years. The area's potential is extremely high, and its resource base indicates a prosperous future.
But the development of the region's wealth calls for major investment. State investment into hydrocarbons exploration will increase from 0.6 billion rubles in 2005 to 3.3 billion rubles in 2020, and investment into the exploration of solid minerals will grow from 0.5 billion rubles to 0.7 billion. In the period from 2005 to 2020, nearly 115 billion rubles will be allocated (together with investment) to exploration in the Urals region.
The improvement of transport infrastructure is crucial for developing the region's resources. The share of the regional transport infrastructure is only 7% of Russia's total. Therefore, the construction of roads, highways and transport corridors there would increase the social and economic development standards of the Urals and West Siberia.
A special development program, including for the railway lines, has been approved for the region. The Industrial Urals-Polar Urals program provides for building the Salekhard-Nadym and the Labytnangi-Ivdel transport corridors (the latter along the eastern slope of the Urals), which will be used to deliver up to 20 million tons of gas condensate to the country's refineries annually.
The future of Russia's fuel and energy sector (primarily the gas industry) is connected with the development of the Yamal deposits. The fuel and energy sector of the peninsula is and will remain the stabilizing factor of the Russian economy. The area turns out 56% of primary energy resources and has 15% of prospected oil reserves and 61% of prospected gas condensate reserves of Russia. Its oil reserves are assessed at 13.5 billion tons and condensate reserves at 5.1 billion tons. Since the beginning of its development, the Yamal area has delivered only 4% of prospected oil and 1.5% of prospected condensate reserves.
It would be impossible to maintain gas production at the current level without the development of the Polar Urals reserves, as there are no other giant onshore gas deposits left in other parts of the country. Gas production can be maintained at the current level until 2010 and possibly increased after the commissioning of the Valanzhin horizons of the Zapolyarnoye and Pestsovoye deposits and the Yuzhno-Russkoye field. After that Russia will have to develop the Yamal reserves.
A total of 26 gas fields with the total proven reserves of 10.4 trillion cubic meters have been discovered in the peninsula and its possible resources are estimated at 20.7 trillion. Gazprom has development licenses for the three biggest deposits there - Bovanenkovskoye, Kharasaveiskoye and Novoportovskoye, with total recoverable reserves of 5.8 trillion cubic meters.
Clearly, Russia is forced to launch comprehensive development of the Polar Urals. This is a complicated task because it is an outlaying difficult to reach region with a harsh climate. This will greatly increase development costs. At the conference in Khanty-Mansiisk, the oil and gas industry leaders outlined problems that are not related to the environment but depend directly on the authorities' decision. In particular, they pointed out that federal ministries and departments were not acting in a concerted manner and there was no coordination between oil companies and state officials. As a result, many problems of the oil companies regarding the forest, land and water codes are not tackled at all or are postponed indefinitely.
Igor Tomberg, M.A. (Economics), is a leading researcher at the Institute of International Economic and Political Studies, Russian Academy of Sciences
The opinions expressed in this article are those of the author and may not necessarily represent the opinions of the editorial board.
