BBC Russian Service (Western Siberia): Siberian oil far from politics

BBC Russian Service (Western Siberia): Siberian oil far from politics

“Like all the other oil majors, Shell can hardly put Russia, which accounts for almost 10% of the world’s oil, aside – no matter how harsh the weather in Siberia or in Moscow’s high offices.”

Wednesday 27 July 2005

By Alexander Koliandre

Here at the base camp of the Salym oilfield a rare visitor is greeted by a “what to do if you encounter a bear” poster and strong advice to use as much mosquito repellent as possible.

The place seems barely touched by the millions of petrodollars that gush from Russia’s pipelines every year

Standing on the western Siberian taiga (or forest) 500 kilometres from the nearest airport, the world oil markets might as well be another planet.

This unpromising spot is at the sharp end of Russia’s swashbuckling brand of capitalism – but is curiously untouched by the tumults that have shaken the oil business in the past few years.

Old field, new life

The Salym oil field was discovered in the 1960s but its full development was started only in 2004 by Salym Petroleum Development (SPD) – a joint venture between Shell and Russian producer Evikhon, a subsidiary of UK-listed Russian company Sibir Energy.

As everywhere in western Siberia, Salym oilfields are located under swampy lands, which means construction is easier in winter when the ground is frozen.

But even in summer, SPD is building frantically in order to meet its tight deadlines. The company’s chief executive, Dale Rollins, hopes to start filling the trans-Russian export pipeline with Salym’s oil by mid-November, seven weeks ahead of the deadline imposed by the licence agreement.

At the construction site, the SDP deputy technical director Shuan Baban – a Russian of Kurdish extraction and a graduate of three British universities – proudly shows what has been built in the past several months.

His favourites are huge steel cisterns built as a precautionary storage facility in case something goes wrong with the pipeline or production: “They are here as a precaution(ary) measure, as no-one wants to see oil spills, but we hope never to use those cisterns”.

East meets West

A small caravan camp in the middle of the swampy Siberian taiga is inhabited by people from all over the world. There are English, Scots, Germans, Dutch, Americans, Russians, Azeris and Australians.

Their working experience stretches from the Gulf of Mexico to Nigeria to the Arabian desert. They are not new to the harsh climate of oilfields but as production supervisor Jan van Beek says, “one cannot get used to a cold of minus-38 centigrade, one just can learn how to cope with it”.

While the expatriates brace themselves against the cold the natives have to contend with the tough working demands of their foreign employers. Just one example – there is a strict prohibition law on alcohol at all the camps and production sites.

The managers understand that when one is confined to a small camp for a month with little or nothing to do except working in the field or sleeping, a temptation to have a drink is high.

But alcohol is banned – though more than a hundred people were fired for breaking the rule in the past 12 months.

Those who have stayed with the SPD do not complain. Russian oil companies nowadays are able to pay almost the same salaries to the oil professionals as the Western majors do. But here in Siberia many experienced oil workers prefer to be employed by foreigners.

Pinch of politics

Nowadays the most valuable asset foreign oil companies are bringing to Russia is not money, as domestic oil giants have become rather rich themselves, but expertise and modern management.

However, back in Moscow, politicians and some of Russia’s oil companies are playing a nationalistic tune, promoting a virtual ban on foreign involvement in big oil and gas projects other than as a role of minor partners.

But here in the field, talk of greedy Westerners ripping off the country is hardly heard as Russians and foreigners are working together, some communicating in oilspeak – a peculiar mixture of Russian and English with “imported” oil and construction terms and local words for food and utilities.

The Salym project is much smaller and less ambitious then Shell’s Sakhalin II venture off Russia’s Far Eastern shores. Relatively small and far away, it is environmentally and politically less high profile, but remains extremely important for Shell’s portfolio.

Like all the other oil majors, Shell can hardly put Russia, which accounts for almost 10% of the world’s oil, aside – no matter how harsh the weather in Siberia or in Moscow’s high offices.

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