ST.PETERSBURG THE SHORTEST WAY TO THE ARCTIC

What Lukoil Needs...

Mikhail Varganov,
Head of St.P."Lukoil" representation

      The process of developing oil resources in north Russia involves oil prospecting and extracting, training personnel, solving the social problems connected with the construction of dwellings for oilmen, and the provision of food and medical aid for them.
      The most important role in solving the above problems lies with St.Petersburg. The administration of "Lukoil" oil company who are developing oil fields in north-west Russia have realized this fact, and therefore in 1997 signed a long-term "Agreement on co-operation" with the St.Petersburg Local Government Administration.
      The construction of ice-class tankers to work under Far North conditions was our first and biggest order to St.Petersburg. Our St.Petersburg branch "Lukoil-Arktik-Tanker", formed 6 years ago, is realizing the present project.
      As is well known, after the dismantling of the USSR a considerable proportion of those vessels with home ports in Estonia, Latvia, Lithuania found themselves in the foreign waters of newly independent states. The Baltic marine steamship line disintegrated. Steamship lines remaining in Russia had mostly bulk-carriers.Besides that, the Murmansk steamship line had a fleet of nuclear ice-breakers. As far as the tankers were concerned, there were no arctic ice-class tankers in our country.
      With reluctance on our part, oil tankers of German, Finnish and Baltic companies had to be enlisted for the regular delivery of liquid fuel vital to northerners. Of course, it is obvious these companies dictated conditions favourable to them, and foreign currency streamed abroad.
      Given these circumstances "Lukoil" developed the idea to form a specialized internal company to provide a tanker fleet for the North. This idea was supported by the Murmank steamship-line's administration. It was possible to obtain credit in foreign banks, though not without difficulties.
      The program accepted by the company involved the construction of ten 20,000-tonne ice-class tankers. The first five tankers were built in Germany. The leading tanker "Perm" came off the stocks in December, 1997. The others of this series were launched in the next two years. All of them are named after Russian cities. The tanker "Sankt Peterburg" was built in spring.
      The remaining five tankers are being built on the Neva riverside, in the Admiralteyskye shipyard. The design of the ships differ from the German by virtue of their reinforced anti-icing protection. Of course, a considerable sum of foreign currency has been saved. Moreover, not only has the consumer won out but the northern capital has also been a beneficiary: One of the biggest enterprises of the city has been kept fully occupied, the number of working places has increased and the volume of tax receipts to the municipal budget has increased also.
      The first vessel "Astrakhan" built at the Admiralteyskye has been operating in arctic waters since the beginning of 2000. The second St.Petersburg tanker "Magas" has been put into operation this summer. The launch of the remaining three tankers is planned by the end of the next year.
      I stress again: in the first place our tankers are intended to deliver liquid fuel both to localities and craft areas of the Far North. However, they do not return empty; they transport the products of Northern industry. The principal cargo on returning is base oil extracted from the arctic shelf and the coastal areas of polar regions. In the port of Murmansk cargo is transferred from ice-class oil tankers to conventional ones and than it is directed to European ports to be sold or processed.
      The "Lukoyl" program to develop the oil-and-gas rich Timano-Pechersky deposit requires not only a quantitative increase in the volume of the tanker fleet. Super 100-150,000-tonne tankers are planned to be built in the next series of oil tanker construction instead of relatively small 20,000-tonners.
      "Lukoyl" attaches great importance to the provision both of its own north-west branches and northern polar areas with St.Petersburg industrial enterprises' products . "Trade House - "Lukoyl" - North-West" is formed to be occupied with these issues. It has already bought products of "Peterburgsky Tractorny zavod", "Reduktor", "Izhorsky zavody", "Krasny Treugolnik" and other St.Petersburg enterprises for many millions roubles for the needs of oil extraction and oil processing workers occupied by processing. The products of the North are being delivered to St.Petersburg via this trade house.
      We intend to move, to the full extent, production of various combustible lubricants and products of petroleum chemistry nearer both to polar sources of hydrocarbon raw and to northern customers of production. This will permit the decrease of the manufacturing cost price. A big oil processing complex implementing the most up-to-date technologies which "Lukoyl" is going to build on the Cola Bay's shore, in the environs of Murmansk will solve this problem. A great many St.Petersburg research and scientific institutes, design offices and construction organizations will participate in the designing and construction of this complex. The development of a feasibility study has been commissioned to the St.Petersburg company "PNP" which has an excellent reputation among organizations dealing in engineering of petroleum chemistry and oil processing.
      The St.Petersburg construction industry is one of the best in our country. Therefore last year our firm formed a specialized branch "Lukoyl-Trans-Stroy-Sever-Zapad" here. Its task is to build automobile roads and railways in the deposits of the Far North, dwellings for oilmen.
      The fact that the only regional representation of our company, for the time being, is established here speaks of the peculiar role of St.Petersburg in developing oil resources of the European North of Russia. Its main task is to co-ordinate the activities of ten of "Lukoyl"'s branches located in the region, to promote projects and ideas of St.Petersburg science and industry in the interests of the company, and to organize the preparation of personnel for "Lukoyl" in such well known high educational institutions of the city as the Institute of Mines, the Marine Academy, the Finance and Economy Academy etc.
      The activity of all "Lukoyl" branches in St.Petersburg is oriented to the widest possible exploitation of scientific-industrial and cultural potential of the city in the interests of developing oil resources of the North of Russia.