Gazprom Switches Tack on Blacklisted Field

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Gazprom has abandoned the idea of using foreign subsea gas production technology at the giant Yuzhno-Kirinskoye field offshore Sakhalin Island in Russia’s Far East. The field was blacklisted by the US in 2015. “Due to the sanctions, the project to develop the Yuzhno-Kirinskoye field will be implemented based on domestic technology of subsea equipment production,” Gazprom's upstream department Director Sergei Menshikov told the Sakhalin Oil & Gas Conference last week. Russia is now developing its own subsea production technology which it never had before. But due to the uncertainty as to when high-quality equipment can be produced in Russia, Gazprom has considered various schemes to get around the sanctions to purchase foreign equipment, at least for the first stages of Yuzhno-Kirinskoye. Last year, Gazprom’s Deputy CEO in charge of upstream, Vitaly Markelov, said the company still considered TechnipFMC and GE as potential suppliers of subsea gas production equipment for Yuzhno-Kirinskoye. FMC, which merged with Technip in 2016, supplied subsea gas production equipment for Gazprom's nearby Kirinskoye field offshore Sakhalin Island launched in 2013 (NC Jun.6'19). In 2019, Gazprom signed a deal with compatriot engineering firm Almaz-Antey for the supply of domestically produced subsea gas production equipment, but Markelov has said that doesn’t necessarily cover the Yuzhno-Kirinskoye project. It will depend on the timeline for testing the equipment. Gazprom plans to use subsea gas production equipment at offshore fields in the Kara Sea in the West Siberian Arctic as well. Yuzhno-Kirinskoye, where Gazprom is drilling production wells without reaching the deposit as it has now subsea trees to complete the wells, is now scheduled for launch in 2023-24, ramping up to a 21 Bcm/yr plateau in 2029-32. However, the energy ministry doesn’t expect the field to reach its design plateau even in 2035, when it will produce 19.2 Bcm, according to the ministry’s presentation from the Sakhalin conference. Yuzhno-Kirinskoye has been regarded as a potential resource base for expansion of Gazprom’s Sakhalin-2 LNG plant and/or pipeline gas exports to China.

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