CASPIAN CONCESSIONS

Oilinfo News, 2008, No. 3

EASTERN OPPORTUNITIES: The Yuri Korchagin field development might open up for a supplier boom in the Caspian resounding for decades.

STG Engineering, a division of Stroytransgaz, Russia's largest contractor, is the first Russian contract holder to undertake work on infrastructure for an offshore field as a turnkey operation.

By: MAGNUS BIRKENES

The reward? Possibly as much as 6,7 BILLION barrels of oil equivalents.

The best part? In the northwestern part of the Caspian, it's easy. Water depths at 3O meters maximum and wells no deeper than 1.000 meters make for few technological challenges.

The extra interesting part? The Russian offshore supply industry could be in for a boom, and with it, lucrative possibilities for foreign subcontractors.

Number one

First up is the Yuri Korcharin field, set to start production in 2009. The boom has begun. STG Engineering is the first Russian company to carry out the full construction cycle for an offshore topside technological complex for an offshore production platform on EPC terms (engineering, procurement, and construction).

The lack of turnkey off shore installation deliveries from Russian suppliers has largely been due to the absence of offshore projects. It's about  to
change.

Stroytransgaz's wholly owned subsidiary STG Engineering is developing detailed design and as-built documentation. The company is procuring equipment and managing construction of the exploitation-processing and energy complexes for LSP-1.

Still a mix

The project to develop the Yuri Korchagin field is unique: Almost all the work, from creating project documentation to commissioning the platform, is being carried out by Russian companies. Alexander Lavrentyev, General director of STG Engineering, looks forward to better times:

- Russia has less experience in offshore development other countries. Therefore experienced foreign companies still play a significant role in many Russian offshore projects. But now we can say that companies like STG Engineering are able to provide EPC services meeting the highest standards of quality. We look to the future with optimism. The market for offshore construction in Russia is growing, and there will be many opportunities for Russian contractors to show and prove their abilities, says Mr. Lavrentyev to Oilinfo News.

IT STARTS NOW - Looking at the scale of coming offshore projects in Russia, we believe that there will be enough room both for Russian and foreign suppliers, says STG SEO Alexander Lavrentyev to Oilinfo News

- Looking at the scale of coming offshore projects in Russia, we believe that there will be enough room both for Russian and foreign suppliers. Basic engineering will still be provided primarily by foreign companies, as well as big part of the process equipment, he adds.

Under way

The Yuri Korchagin and V. Filanovskoye fields will become Lukoil's base of oil production in the northern Caspian Sea. According to the oil company's plans, production there will exceed 12 million tons of oil in 2016. STG is already busy doing their part. In 2007, work began to build the upper structure and assemble the main systems and equipment. By the end of June this year, about 7.000 tons of metal frameworks, including the power unit of the gas turbines, had been assembled. The two-part drilling derrick had also been assembled.

Where any foreign companies competing with STG for this job?

- Stroytransgaz is not only the best and the biggest Russian contractor, but also a well known international contractor. Still, normally we get our contracts competing with other companies - in Russia, Saudi Arabia, Algeria, Greece, Syria, the United Arab Emirates and so on. Lukoil chose us for this project because we managed to offer the best quality, and best skills, at the best price, says Mr. Lavrentyev.

The first step

The Yuri Korchagin field will be the first field on the Russian Caspian shelf from which comprehensive development of other offshore fields will be carried out using a unified transportation structure and shared onshore facilities. Others are to follow. Ten more field developments are on the horizon. Between 2012 and 2014, the Khvalynskoye and Filanovskoye fields will come. In 2030, Lukoil looks to go for the Khazri field. With them comes several more ice resistant platforms, infrastructure and support services. Local suppliers in the Astrakhan Oblast area will be guaranteed work for decades.

- Stroytransgaz and other contractors will acquire invaluable experience realizing projects to develop turnkey offshore projects, says Alexander Lavrentyev.

It might be time for western companies to start wading the shallow Caspian waters.

STG Engineering is hard at work. The field is to start producing in late 2009, and over 1.000 workers are bus-tling about the platform construction site
The Yuri Korchagin field   LSP platform facts:
  • Located in the northern Caspian Sea, some 150 kilometers from shore and 220 kilometers from the port of Makhachkala. Discovered in 1999/2000.
  • Waters depths average around 12 meters.
  • Reserves estimated to be around 700 million boe.
  • Development is planned via stationary, ice-resistant platforms (LSPs), capable of year-round drilling and processing. Formation water and petroleum products will be piped 60 kilometers to a floating tank facility with a 225.000 barrel storage capacity.
    From there,lt will be shurtled to the port of Makhachkala, then piped through the Transneft continental pipeline.
  • For three years, gas will be reinjected into the reservoir. In the years to follow, it will be piped to shore.
  
  • LSP-1 will produce, while the connected LSP-2 will serve accommodation needs.
  • LSP-1 will be a semi-submersible, two-story installation resting on six columns on two buoyant tanks. Length and width will be 95,5x72,2 meters, height some 90 meters. Weight? 15.500 tons. Modular based.
  • Will be capable of drilling 33 wells at 7.400 meters.
  • Powered by four gas turbines.
  • Equipped with heat able ice shields to protect it from ice contact.
  • LSP-1 will be used in future production of gas from the nearby Khvalynskoye field.
  • LSP-2 will be able to accommodate 120 persons. Has helipad.
  • Connected to LSP-1 via a 70-meter long bridge.
  • Both pfatfatms are designed for zero discharge operations.
  • Due for transport and installment in Q2 2009; production to start by end of 2009