Final Investment Decision on Chayandinskoye Adopted

Source: 10/30/2012, Location: Asia

Gazprom starts the second stage of the Eastern Gas Program – establishing a large gas production center in the Republic of Sakha (Yakutia). Gazprom's Management Committee adopted the final investment decision on the Investment Rationale for the Chayandinskoye field pre-development, transmission and processing of gas.

The investment rationale will lay the foundation for generating the project documentation on infrastructure of the Chayandinskoye oil and gas condensate field, separate sections of a gas trunkline from Yakutia to Vladivostok via Khabarovsk as well as processing and gas chemical facilities in Belogorsk.

The Company's specialized structural units were tasked to prepare the relevant project documents.

The Chayandinskoye field is the cornerstone of the Yakutia gas production center. Gas reserves of the Chayandinskoye oil, gas and condensate field make up 1.2 trillion cubic meters – almost twofold more than Russia produced in 2011. The recoverable oil and condensate reserves – 79.1 million tons. It is projected to bring into production Chayanda's oil rim in 2014 and gas deposits – in 2017.

Gazprom will build a gas pipeline from Yakutia to Vladivostok via Khabarovsk in order to convey gas produced from the Chayandinskoye field. The pipeline's length will amount to some 3,200 kilometers. The gas pipeline route will run in parallel with operating Eastern Siberia – Pacific Ocean oil trunkline, thus allowing to optimize infrastructure and energy supply costs. The annual throughput of the gas pipeline will be 61 billion cubic meters, the pipeline will be fully operational in late 2017.

According to provisional estimate, it is supposed to invest RUB 430 and 770 billion in pre-development of the Chayandinskoye field and construction of the gas pipeline.

Establishing the Yakutia gas production center will trigger large-scale gas processing development in Eastern Russia. In parallel with the Chayandinskoye field pre-development and the gas pipeline construction, Gazprom will create gas processing and helium production capacities in Belogorsk.

Specialized companies will invest in building gas chemical facilities that utilize gas from the Chayandinskoye field.

At the next stage the Kovykta field will be fully developed in the Irkutsk Oblast and a 800 kilometer gas pipeline between the Irkutsk and Yakutia gas production centers will be build. Both centers will be connected to a system of gas delivery to the Pacific coast of Russia.

Consideration is being given to possible connection of the Irkutsk and Krasnoyarsk gas production centers by gas pipelines that will subsequently run towards Novosibirsk and Omsk (total length is around 2,000 kilometers) and join the gas transmission system in Western Siberia and European Russia.

In this way, Gazprom is going to build a unified gas supply system across the whole country, from the West to the East.

The Yakutia gas production center is, first of all, meant for supplying gas to Russian consumers. Necessary conditions will be created for sustained and long-term development of gas supply and gasification of Yakutia's population centers and other regions of the Far East.

Besides, the Yakutia gas production center will contribute greatly to creating a new center of Russian gas export in Eastern Russia. In this context, Gazprom is going to build an LNG plant in Vladivostok. The investment rationale is being currently developed for the plant construction.

The Management Committee noted that Asian countries may be commensurate with the European sales market of Russian gas or possibly surpass it, taking into account an ample resource base of Eastern Russia – 53 trillion cubic meters onshore and 15 trillion cubic meters offshore as well as the necessary export capacities that will appear in the region before long.

The state-run Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-Pacific countries (Eastern Gas Program) was adopted in September 2007 pursuant to the Russian Industry and Energy Ministry Order. Gazprom was appointed by the Russian Federation Government as the Program execution coordinator.

New gas production centers are emerging in Eastern Russia: Krasnoyarsk, Irkutsk, Yakutia, Sakhalin and Kamchatka.

Geological exploration is underway at the Chayandinskoye field, information is being updated on the geological structure, formation geometry and the degree of pay zones saturation. More than a half of gas reserves have been classified as explored.

Like other Eastern Siberian fields, the Chayandinskoye field features a complex geological structure and specific PT formation conditions. The project will be carried out in harsh natural and climatic conditions. Thus, the ambient temperature in Yakutia may fall below 50°C during winter months. Besides, the route of the gas pipeline running from Yakutia to Vladivostok will cross bogs, mountains and seismic hazard areas.

Bringing into production all the regional gas reserves will have a crucial meaning for efficient development of the Yakutia gas production center and optimal load of a gas transmission system from Yakutia. In December 2011 Gazprom obtained two subsurface use licenses for the Sobolokh-Nedzhelinskoye, Verkhnevilyuchanskoye, Tas-Yuryakhskoye and Srednetyungskoye fields located in the Republic of Sakha (Yakutia).

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