Gazprom takes part in Parliamentary hearings on East Siberian field development legalisation

“Today, the State Duma of the Russian Federation has held parliamentary hearings (organized by the Natural Resources and Nature Management Committee) on the East Siberian oil and gas fields’ development legislature. Russia produced natural gas supplies to Asia Pacific: a new impulse for economic development between Russia and the countries of the Asia Pacific region”.

Vasily Podyuk, Member of Gazprom Management Committee, Head of the Gas, Gas Condensate and Oil Production Department, and Sergey Pankratov, Deputy Head of the Strategic Development Department presented their reports at the parliamentary hearings.

During the hearings, special attention was paid to the new version of the Minerals Law. Vasily Podyuk noted that the so-called basic fields are an important element in creating a unified natural gas production, transportation and supply system in Eastern Siberia and the Russian Far East in view of the possible gas exports to the Asian Pacific countries. These fields should be classified as a part of the federal fund which would serve as a guarantee of sustainable development and functioning of the United Gas Transmission System (UGTS), facilitate stable gas supply within the Russian Federation and bolster national economic security.

According to Vasily Podyuk, the Minerals Law should stipulate the creation of the aforementioned federal fund and the mechanism of subjecting hydrocarbon fields to this fund. The rights to develop the fund’s fields must be granted by the Government of the Russian Federation based on the state’s share in the company to which the rights are granted.

Vasily Podyuk underlined that the new version of the Minerals Law contained the mechanism of granting development rights explicitly through tenders and did not take into account technical and technological potential of bidders. Granting of rights should be done in two stages. The first stage is a preliminary selection of bidders that presented their fields’ development programs based on the latest technology and the most favorable investment programs for geological exploration and development. The second stage should be a privately-held tender for the selected bidders.

Besides, it is important to synchronize granting rights to hydrocarbon fields’ development in Eastern Siberia and the Russian Far East with the Program of regional development of a unified natural gas production, transportation and supply system in view of possible exports to the Asian Pacific countries. The Russian Government placed the responsibility of drafting the Program on the Ministry of Energy and Gazprom, and the Program is nearly completed.

The Program’s realization will facilitate efficient and stable gas supplies to domestic customers both in the eastern regions of Russia and within UGTS, and will allow inter-governmental contracted exports of Russia produced natural gas to Asia Pacific from UGTS without the necessity of linking sales to specific gas fields.

Vasily Podyuk paid special attention to the issue of integrated gas production and full utilization of all minerals containing in natural gas in Eastern Siberia and the Russian Far East gas fields which are characterized by a complex component composition. Therefore it is necessary to create investment conditions stimulating investments, including foreign investment, into modern gas treatment facilities. The Eastern Siberian gas fields contain unique helium reservoirs, and drafting a state program on helium production and its utilization in high tech industry was proposed.

V. Podyuk noted that Gazprom’s proposals are based on a more than 50 years’ experience of engineering, constructing and operating UGTS. The analysis of this experience confirmed the viability of the decisions made and the advisability to utilize them in the process of building the East Siberian and Russian Far Eastern system as an integral part of national UGTS.

Sergey Pankratov noted in his report that successful realization of the large scale east-oriented Program could be achieved only with the state support. He named the following state support measures:

• license policy based on the drafted Program;
• legislation concerning regional gas market price formation mechanisms;
• unified export sales channel principle realization;
• reaching intergovernmental agreements with the countries – potential importers of Russia-produced natural gas;
• drafting a state Program of helium production and utilization in the high tech industry.

Information Directorate, OAO Gazprom