04/02/2000
By Aziz Ait Said (CEO TOTALFINA Russia)
France and Russia have a long tradition of close co-operation
in the field of energy. These strong solid ties were developed
during the past thirty years, mainly in three areas of the energy
industry: oil, natural gas and nuclear energy. In this article,
we will concentrate on the fields of liquid and gazeous hydrocarbons.
Co-operation in the oil sector
The oil industry
cover mainly three areas of activities : exploration and production,
refining, and trading, and marketing. Co-operation between French
companies and Russia has been a long tradition in the field of
trading as TOTALFINA and ELF have been large buyers of Russian
Crude or Russian oil products for more than three decades. In
the recent years these French companies purchased around 15 million
tons per year of Russian crude and products. In the field of oil
processing, both on the production sites and in the refineries,
French suppliers and engineering companies like the TECHNIP Group
have played a substantial role in Russia for quite a long time.
However as long as investments were a monopoly of the state, i.e.
as long as the USSR existed, the energy companies and particularly
the international oil companies could not fulfill their main role,
which is the role of investors and risk takers. This avenue of
co-operation is now open, and this is a domain which should offer
bright perspectives for the future both for upstream and downstream
activities.
Among the International Oil Companies TOTALFINA was one of the
first ones to invest in the newly opened Russian oil industry.
As early as 1991 it established a Joint Venture with TATNEFT in
Tatarstan which invested in the high tech field of enhanced oil
recovery through chemical process (polymers injection). This small
but successful project could open the door for a future large
scale co-operation on the Romashkino giant oil field.
A second project, of larger scale, was discussed as early as 1990 and concluded in December 1995 : this relates to the Kharyaga field. Its objective was to develop some untapped horizons of the Kharyaga field, located in the Nenets territory in the Timan Pechora basin. The contract was the first PSA (Production Sharing Agreement) signed by Russia with European companies. The joint European group consist of TOTALFINA (operator) with 50 %, Norsk Hydro of Norway with 40 % and the Nenets oil company with 10 %.
The project was put
on stream at the targeted date and within budget : production
started at the end of 1999 at a rate of approximately 10,000 b/d.
Transportation of the oil produced is by pipelines operated by
Komitek and Transneft. Totalfina and Russian authorities have
agreed in principle that the co-operation on the further development
of Kharyaga should be extended in the future to other parts of
the field.
Obviously, like all large international companies TOTALFINA and ELF are looking at other oil projects in Russia in which they could become investors in the future.
Co-operation in the gas sector
France started to buy gas from Russia more than 25 years ago and
in 1999 Russia was France's second largest gas supplier (just
after Norway and before Algeria). In addition to this major commercial
relationship the French gas company "GdF" (Gaz de France)
-which is today the sole buyer of the Russian gas sold to the
French market, entered in a broader partnership with GAZPROM.
This co-operation involves scientific and technical co-operation
especially in the area of gas pipeline maintenance. A specialised
trading company, FRAGAZ, was also established and another company,
ECOGAS, conduct studies about the reduction of energy consumption
and the optimisation of energy use in Russia. Lastly, some other
specialised ventures have been established by GdF to renovate
or improve gas and heating networks in the cities of Moscow and
Saint Petersburg.
Beyond the traditional co-operation between Russia as an essential gas supplier for France, and France as an important gas customer for Russia, new perspectives are opening as foreign investment can also be now considered in the gas sector. Clearly in this new domain of potential co-operation one project stands as being a world class one : this is the Shtokmanovskoye project, which shortened nickname is now Shtokman.
TOTALFINA is proud to be one of the four international companies involved in co-operation with GAZPROM and ROSSHELF to develop this challenging gas field.
Shtokman is a 100 tcf (or 3000 billion cubic meters) gas field located in the Barents sea, some 550 kilometers north of Mourmansk. It could become one of Russia's major gas sources both for export to Europe and for its internal markets. Present plans foresee a possible production start-up around year 2010 or even earlier. In order to supply western european markets this project will require both major investments for its production facilities (platforms, in rather hostile arctic waters and with a water depth of around 300-350 meters), and major investments for its transportation pipeline necessary to bring the gas to the consuming markets (over 3000 km of large diameter pipelines to reach the German border for example). The field could produce at its full development some 60 to 90 billion cubic meters per year. An initial development phase of around 20 bcm per year is presently contemplated.
In November 1999 this project was approved by the Douma as a priority project to be developed under a PSA (production sharing agreement) with the foreign partners.
Last but not least, the gas co-operation between TOTALFINA and GAZPROM is not limited to Russia, as GAZPROM has joined TOTAFINA as a partner for the development of Phases 2 and 3 of the giant gas field "SOUTH PARS" in Iran. This project is progressing satisfactorily and should be put into production in year 2001.
In order to conclude
this brief summary of the French-Russian co-operation in the areas
of oil and gas I will quote from a speech made by TOTALFINA Group
Chairman Thierry Desmarest in Moscow in the spring of 1999 :
"TOTALFINA is ready and willing to engage in a long lasting
partnership with Russia. The foundations for an in depth co-operation
do exist. They are concrete… Our willingness for long term
co-operation with the Russian Federation is applicable not only
within Russia, but also abroad, as can be testified by the co-operation
in Iran between TOTALFINA and GAZPROM".
Co-operation in the nuclear sector
This co-operation has been initiated in the mid sixties and has been progressively reinforced since then. It involves today nearly every sector of the civilian nuclear industry, both on a scientific level and on an industrial level.
Agreements between governments of France and Russia constitute the framework for this co-operation and cover subjects as diverse as : research on nuclear physics, nuclear reactors for electricity generation, the nuclear fuel cycle, nuclear residues processing and storage and safety and environment protection. This co-operation helps to create a better and safer world as it covers subjects such as the handling of nuclear crises and the dismantling of nuclear weapons. On the French side this co-operation is conducted by four major players : CEA (French Commissariat for Atomic Energy), EdF (Electricity of France), COGEMA (nuclear fuel cycle) and FRAMATOME (building of nuclear plants).