Hydro Assists the Development of Russian O&G Supply Industry

The Barents Sea offers big potential for oil and gas activities. This week, Hydro is hosting two conferences in North-west Russia focusing on how Russian suppliers can best prepare for and benefit from future oil and gas activities in this region.

The conferences mark the start of Hydro's "North-west Russia Supplier Development Project" (phase 2), following Hydro's Supplier survey (phase 1) carried out in 2003.

These initiatives are in direct response to the energy cooperation called for in the Joint Declaration signed by the Russian President Putin and the Norwegian Prime Minister Bondevik in November 2002.

"There is a benefit to use local suppliers and resources in North-west Russia for major projects such as the development of the giant Shtokman gas field", says Arvid Halvorsen, Senior Vice President and head of Hydro's Moscow office.

Competitive advantage
"Many of the local companies have developed strong manufacturing skills as suppliers to the Russian navy and the fishing industry. This may give local suppliers a competitive advantage when oil and gas projects in the region are being developed, but there is a need for competence development and familiarization with the requirements of the offshore oil and gas industry", says Halvorsen.

The "North-west Russia Supplier Development Project" is supported by the Murmansk and Arkhangelsk oblasts, the Finnmark County, the Russian oil and gas companies Sevmorneftegaz, Gazprom and Rosneft, Innovation Norway, and the Barents Secretariat.

Hydro's Norwegian partners in the execution of the project are Aker Kvaerner, INTSOK, Storvik & Co., ENSI, and Achilles.

In addition to the above-mentioned project supporters and participants, the conferences in Murmansk and Arkhangelsk and the following project activities involve several representatives from the North-west Russia supply industry and a number of Norwegian supply companies.

Helping to establish partnerships
Hydro's experience from the Norwegian continental shelf is of high relevance to future oil and gas activities offshore North-west Russia, as the two regions feature several common characteristics.

"Hydro is offering advice based on this knowledge and experience to companies wishing to qualify as suppliers and is also helping to establish partnerships between supplier companies in Russia and Norway" Halvorsen said.

Shtokman, a gas field discovered in 1988 and located 560 km north of Murmansk, illustrates the potential and challenges for oil and gas companies and the supplier industry in the Barents Sea.

This giant field contains 3000 billion Sm3 of gas, which is almost three times as much as the resources in the Troll field on the Norwegian Continental shelf.

Hydro has worked on the development planning for the Shtokman field since 1989, together with Russian and Western partners.

"In October 2003 Hydro signed an agreement with Rosneft to carry out a new study of possible development alternatives for the Shtokman field. The study looks into the possibility of a sub sea development for the first phase, based on Hydro's experience from the Ormen Lange gas field on the Norwegian continental shelf", Halvorsen said.

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