Part II. The economy of oil and gas industry

UNIT 4. Present-day state of oil and gas Industry

Text 1

Pre-reading task

a) Discuss the following questions before reading the text.

1. Do you agree that Russia is one of the leading oil-extracting countries of the world? Where are the largest oil and gas deposits situated in our country? What other oil-producing countries do you know? Where are they located?

2. Do you think that oil and gas industry is very important for Russian economy? In what way does oil and gas industry contribute to the development of Russian economy?

b) Key words: hydrocarbon raw materials, gas-bearing territory, exploration, production of oil and gas, resources, marine shelf, license, geological research, investment capacity.

Look up the key words in the dictionary to find out the exact meaning. Write them out.

Reading Oil and Gas in Russia. Development and Financing of Large Projects.

B.A. Yaskevich, Minister of natural resources of the Russian Federation

Russia is one of the leading oil-extracting countries that has a large reserve of hydrocarbon raw materials, less than half of which are explored and under industrial exploitation. Russia possesses a vast area of oil and gas-bearing territories exceeding 10M km² with 3.5M km² of internal and external marine shelf. For one and a half centuries Russia has been carrying out a persistent policy of search and exploration of oil and gas fields in accordance with the long-term interests of the national economy. Already 15 bin MT of liquid hydrocarbons and 12 trln m³ of gas have been extracted from the depths but a large part of the land and the main part of the perspective shelf remain unexplored and can become objects of large international projects. Investment capacity of the Russian Federation in terms of hydrocarbon raw materials is estimated at USD 60 bln.

At the moment about 3000 oil and gas deposits are to be found in Russia, about half of them under exploitation. Western Siberia and the Urals-Volga region are the main centres of oil and gas industry, providing 95 per cent of Russian oil and gas production. Oil resources were explored in 40 federative units of the Russian Federation, more then half of them are in the Khanty-Mansiisk autonomous region. Large oil reserves are in deposits of the Yamalo-Nenetskii and Nenetskii autonomous regions, Tatarstan, Baskortostan, Udmurtia and some other regions. From 80 to 90 percent of explored oil reserves are under industrial production in the main oil regions. Gas resources have been found in 33 units of the Russian Federation. The total amount of discovered gas available for industrial production is 46.6 trin m³. The Yamalo-Nenetskii autonomous region contains 34.6 trin m³ or 74 percent of the gas. Large gas deposits were also found in the Astrakhan and Orenburg regions, Saha (Yakutia) republic, at the shelf of the Barents, Kara and Okhotsk seas etc.

The gas-production industry of the Russian Federation has more resources than that of oil-production. At the beginning of 2001 47 per cent of discovered resources were under production and 18 per cent of them were worked out. They are concentrated in three regions - the Astrakhan and Orenburg regions and Yamalo-Nenetskii autonomous region. The rules of depths usage were stipulated by federal laws "On depths", "On production division agreements", "On continental shelf of the Russian Federation", Regulation on the procedure of issuing licenses for depths use and several other federal, territorial and ministerial regulations.

The right to use the depths can be rendered on the base of a license for geological research of the depths for 5 years, for production of minerals for 20 years and for geological research of the depths and production of minerals for 25 years. It can be generally stated that despite prolonged activity of the oil and gas production industries and economical difficulties in the last years there are large reserves of hydrocarbon raw materials. The raw materials are of different qualities and unevenly distributed, unevenly worked out and still there are considerable geological and technological possibilities to improve production of oil and gas. These possibilities, to a great extent, are connected with technical and technological modernization of oil, gas and gas condensate deposits, development of infrastructure and beginning of production in new regions, use of heavy oils, coal gas and other factors.

Objective evaluation of presence in the depths of Russia of large profitable oil and gas resources as well as economical, technical, social, political and ecological factors form the bases of a long-term strategy of development of the Russian oil and gas complex.

In the end I would like to stress once more that Russia has a large potential of unexplored oil, gas and condensate resources.

Its economic importance is extremely high and will increase considerably in the future along with increases of energy consumption in Russia and in the world. This opens the way for different forms of large international projects in the sphere of geological exploration of oil and gas fields in Russia. The projects may be of different term and investment share of foreign companies. Russia is interested to make this co-operation stable and long-term.

Comprehension check

I. Answer the following questions.

1. How does Russia carry out a policy of search and exploration of oil and gas fields?

2. How much liquid hydrocarbons and gas have been extracted so far?

3. How many oil and gas deposits are found in Russia?

4. What are the main centres of oil and gas industry?

5. How is oil and gas extraction regulated?

6. How long can the license for geological research be valid?

7. In what way can economical difficulties be solved in oil and gas industry?

8. What are the main components of a long-term strategy of oil and gas complex development?

9. What makes Russia attractive for foreign investments?

10. Is Russia open for international cooperation? Prove it using information from the text and your general knowledge.

II. Agree or disagree with the following statements.

1. Russian oil and gas resources are almost exhausted.

2. Large international projects can be realized in Russia.

3. There is only one federal law regulating the rules of depths usage.

4. The raw materials are very similar all over the country.

5. Russia is interested in getting foreign investments.

III. Complete the sentences:

1. Gas resources in Russia are … than oil resources.

2. The amount of investments can be as great as … .

3. Most oil resources are to be found in … .

4. 74 % of gas is located in … .

5. Exploration and production of hydrocarbons are carried out on the basis of … .

6. With technical and technological modernization of oil and gas deposits it is possible to … .

7. A long-term strategy of oil and gas complex development is based on … .

8. Worldwide increase of energy consumption opens the ways of … .

Talking Point

a) Think and say. Do you find the speech of the Minister optimistic? Pick out some facts and prove that the future of oil and gas industry is favourable.

If you don’t share the optimism of B.A. Yaskevich, explain why. What are the negative effects of oil and gas production?

b) Pair work.

You are a foreign journalist of “The Economist” Mr.Yaskevich is giving a press-conference. Ask him questions about oil and gas development prospects in Russia.

Text 2

Pre-reading task

a) Discuss the following questions before reading the text.

1. Are the USA rich in oil and gas? Where are oil and gas extracted? (name some regions) What american oil and gas companies have you heard of?

2. What kinds of oil and gas companies do you know? (according to their main activities)

b) Key words:

Some special terms need explanation, otherwise it will be difficult for you to understand the meaning.

flooding – заводнение (пласта)

mature – зрелый

mature production – поздняя стадия разработки месторождений

overhead – накладные (общие) расходы производства

to exploit – эксплуатировать, разрабатывать месторождения

to deplete – истощать, исчерпывать (запасы), хищнически эксплуатировать

Now try to guess the meaning of the terms “the exploitationist” and “the depletionist” in reference to oil companies.