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Summary of Working Paper No. 56-1996

III.07.3: West Siberian Oil and the Northern Sea Route: Current Situation and Future Potential.

By Valery Kryukov and Vladimir Shmat, Institute of Economics and Industrial Engineering, Siberian Division of the Russian Academy of Sciences, Novosibirsk, Russia, and Arild Moe, The Fridtjof Nansen Institute, Lysaker, Norway

The paper discusses links between the Northern Sea Route and the development of oil and gas in the northern regions of Western Siberia and Krasnoyarsk krai (Northern ObYenisei). Several oil and gas areas can be identified within this region. These are quite distinctive in terms of their geographic location, concentration of resources and even the extent to which their geology has been studied. These factors in turn affect possible approaches to how the NSR can be opened up.

The region contains very large oil and condensate reservoirs with proven and prospective reserves of over 10.5 billion tonnes. Production so far has exploited around 5.5% of recoverable reserves.

With such large reservoirs, an annual output of around 210 million tonnes is theoretically possible under the most favourable conditions. Any growth in the output of the region (particularly for export) may be retarded because of the limitations of the existing pipelines in the oil transport network. The Northern Sea Route as a way of getting hydrocarbons out from this region to potential markets is an interesting alternative. The potential for access to Eastern markets is unique. There are two possible approaches to the problem: the local perspective starting with individual schemes involving the transport of up to 30 million tonnes, and the broadbased perspective with a mainline 'corridor' capable of a throughput of up to 100 130 million tonnes a year. Both of the variants discussed require huge investments, the first an estimated 1.6 2.2 billion dollars, and the second needing sums of 3.8 5.3 billion dollars. Concentration of licenses on few hands or a viable cooperation arrangement between license holders will be a prerequisite to undertake the necessary investments.