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The representative of All-Russia Petroleum Exploration Institute (VNIGNI) Lyudmila Kalist declared the results of calculated economic prospects for development of the North Sea offshore oil and gas resources. Mrs. Kalist discounted the budgetary oil price for 2007 - $61 per barrel, gas price - $230 thousand cubic meters. Investments in development of one tone of raw hydrocarbons in the North Sea shelf frequently 1.5 times exceed the investments in on-shore development (more than 650 rubles per 1 tone offshore vs 470 rubles per 1 tone onshore). Net present value from such projects is almost two times lower than those obtained from the offshore (approximately 300rubles onshore vs 1565-170 rubles per tone offshore). Calculation results provided by Mrs. Kalist certify that the development of the offshore oil and gas resources can be suspended again.

Boris Kutichkin. General Director of “Arktikshelfnefetgaz” initiated the entering of Production Sharing Agreements (PSA) from which the government has refused in recent years. He believes that due to the current state of the economy, development of Arctic hydrocarbon reserves is seen as unprofitable. Mr. Kutichkin noticed that when there is no evidence of competitive edge, state companies can delay geological exploration and offshore oil and gas production.

Nowadays, Russia offshore potential comprises 100 milliard tones equivalent oil including 13.8 milliard ton of oil and 79.1 trillion cubic meters of gas. This is more than 70% of oil resources and approximately 90% of gas of all Russia offshore zones.

The key peculiarity of Russia offshore field development projects is the considerable investment potential and attraction of foreign investors. Russian suppliers must interact with foreign customers who are not interested in cost saving and the employment of less expensive Russian equipment due to the PSA framework.

In order to implement offshore projects it is a requirement to compass integrated procurement of complex equipment. The suppliers will be determined by the results of tenders in which even foreign companies took part in. It is difficult to cooperate with foreign Customers being a separate plant without floating assets, work experience on the world market and trade specialists. Russian equipment suppliers are operating solely and this is a negative factor while competing with foreign companies.

The most high-tech components of the offshore platforms are drilling equipment rather than platforms (shipbuilding). Underrated experience and potential of Russian oil and gas equipment engineering is reflected in importing of process equipment and Russian companies are procuring orders for repairing of used foreign platforms. For example, a used platform “Molikpak” was procured to perform operations in Sakhalin and in order to equip the platform for the Prirazlomnoye field in Barents Sea they have procured the topside of platform “Khatton” designed as a quarter of a century ago.

Such situation must be governed by the state. Manufacturing of oil and gas equipment in Norway and China has been evolved only due to the government support. In Kazakhstan, manufacturing of oil and gas equipment is growing rapidly and is having a high pace of development while the government policy is coherent and directed to import substitution in commodities-based industries.

I ran government is working hard to develop offshore drilling equipment production.

The conference between offshore oil and gas development Project Operators and their Contractors will take place on December 4, in Moscow. The conference will be held within the third International Conference “Offshore Drilling Equipment” (NEFTEGAZSHELF -2008). The meeting will cover the potential development of offshore oil and gas projects.

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