CONOCO in RUSSIA

Conoco, an international corporation founded in 1875, is the 10th-largest non-government-owned petroleum company in the world. Based in the United States, it employs about 17,000 people and operates in more than 25 countries. Conoco explores for, develops and produces crude oil and natural gas, and processes natural gas to recover high-value liquids. It also refines crude oil and other feedstocks into petroleum products, and distributes and markets these products.

In January 1992, Conoco and Arkhangelskgeologia formed Polar Lights Company, a limited liability company to develop Ardalin group of fields located in Timan-Pechora basin in North West Russia. The Ardalin field, which produced first oil in August 1994, represents the single largest investment from the West in Russia's petroleum industry. With its planned wells and a 65 km pipeline connecting Ardalin to the existing Russian system it has established a model infrastructure for oil production in an area where there was no previous production.

According to the terms of the Polar Lights Joint Venture Agreement, the owners share investment costs and resulting profits. The venture is guided by a Board of Founders with representation from the partners.

In August 1995, Arkhangelskgeologia was reorganized, changing its legal status from a state enterprise to a joint stock company under the new name AO Arkhangelskgeoldobycha. Earlier that year, Rosneft had purchased 40 percent of Arkhangelskgeoldobycha's 50-percent ownership interest in Polar Lights. The current ownership interests in the venture are: Conoco, 50 percent; Arkhangelskgelodobycha, 30 percent; and Rosneft, 20 percent.

Polar Lights Company is the leading Russian-Western energy joint venture currently operating in Russia, in terms of investment, experience, production, export volumes and nationalization of workforce. The company's reputation for ethical conduct and safe and environmentally sound operations has assured the joint venture's stature as a world-class operator, while its strong focus on employee training is creating a workforce which can successfully compete in the global energy environment.

Polar Lights Company Highlights:


- Total investment of $400 million.
- Have a capacity to produce at rate of 7,000 tones/day.
- Production volume of 8.5 MM tonnes since August 1994.
- Annual production volume in 1999 of 1.83 MM tonnes.
- Revenues of $ 175.2 MM (for year 1999).
- Overhead and operating costs of $9.00/tonne (excludes taxes, royalty and financing costs).
- 9.5MM manhours of operating experience in Timan Pechora, including seismic, drilling, construction, logistics and production.
- Workforce nationalization of 93 percent, including many key management positions.
- Successfully audited safety, health and environmental management systems in accordance with the standards of the world's leading multinational leaders.
- Total Taxes paid to Federal and Nenets Okrug Budgets are $159,272,000 U.S. Dollars, of which:


$79,719,300 U.S. Dollars were paid to the Federal Budget,
$71,946,500 U.S. Dollars to the Nenets Okrug Budget,
$7,150,300 U.S. Dollars to Arkhangelsk Oblast Budget and
$456,100 U.S. Dollars to Komi.

Having successful experience with the Ardalin field, Conoco continues to prepare for another project in the Timan-Pechora region in the Northern Area together with Lukoil and AGD. This area includes four fields: Yuzhno-Khilchuyu, Khilchuyu, Yareyu and Inzerei. To date, Conoco has alone spent over $110 million to conduct exploration on the above mentioned fields, including 3D seismic, drilling of 10 exploration wells, well testing, environmental study of the fields' development impact on Arctic tundra and reprocessing of the existing geophysical data. As a result, Yuzhno-Khilchuyu field is considered to be ready for development.

Conoco strongly believes that its experience in developing the Ardalin field in the Timan-Pechora region, and its safe and environmentally friendly operations, proves Conoco's ability to work in severe Arctic conditions. Conoco's flexible approach and clear understanding of local community needs should be beneficial for the Nenets Autonomous Okrug, Conoco, its partners and Russia as well.

Conoco has been a participant in Russian natural gas activities since the late 1980s, when it joined several other foreign and Russian partners to study the feasibility of developing the Shtockmanovskoye gas condensate field in the Barents Sea. Recently, the company was invited to join Gazprom and Rosshelf in an effort to evaluate the unified European gas market and determine when it would be appropriate to begin developing this technically and economically challenging project. Additionally, the company is working on several initiatives with Gazprom in the areas of gas transportation, processing and marketing.

 

Back to the Top of page

RETURN TO MIPC/MMNK MAIN PAGE