Translated material
Experiments with sulfur
Total may try its gas luck at the Astrakhan field
The head of Gazprom, Alexey Miller, paid a short but eventful visit to Paris last Friday. During the day, he managed to hold the next meeting of the European Business Congress and meet with the main French partners - the heads of Gaz de France and Total Jean-François Cirelli and Christophe de Margerie. During a discussion at a congressional meeting, Mr. Miller said that the era of cheap gas, as well as cheap oil, was over. With the head of Total, the chairman of the board of Gazprom discussed issues related to how to extract this expensive gas in Russia, and with the head of GdF the conversation was primarily about the sale of blue fuel. In particular, the Russian gas concern continues negotiations with Total on cooperation in the sulfurous Astrakhan gas condensate field. As is known, previously the Italian Eni failed to enter this project for economic reasons, and the Ukrainian entrepreneur Dmitry Firtash for political reasons .The reserves of the Astrakhan field are estimated at 4.2 trillion cubic meters (according to ABC1+C2 categories), which allow the production of 50-60 billion cubic meters of gas per year. However, due to the high (up to 25%) hydrogen sulfide content and the depth of the reserves (more than 4 km), only about 12 billion cubic meters are extracted annually. Moreover, approximately 40% of the raw materials (sulfur and other components) extracted from the field are now simply written off as waste rather than processed. As noted in Gazprom's information memorandum, it is planned to increase production at the field through the use of recycling processes, which will reduce the emission of harmful substances, as well as eliminate the need for processing and storing illiquid sulfur.
Gazprom has long been looking for a partner to improve production efficiency in the Astrakhan region. In 1998, this was the Italian Eni, which, as part of a strategic agreement on the construction of the Blue Stream gas pipeline to Turkey, agreed to cooperate in the production and processing of sour gas in the Astrakhan region. For this purpose, a joint venture between Eni and Stroytransgaz (which was controlled by the former management of Gazprom) was created. However, the enterprise did not work: on the one hand, gas prices (in Europe and Russia) made such processing projects not very profitable, and on the other hand, in 2001 the management team at Gazprom changed, and the project was forgotten.
At the same time, part of the rights to develop the Astrakhan field - the right bank section with reserves of about 220 billion cubic meters - was transferred to the new structure of Right Bank OJSC, later renamed the Astrakhan Oil and Gas Company. The co-founders were the regional administration and the subsidiaries of Gosinkor (part of the Guta group). After the forced bankruptcy of Guta, the shares (by that time 74.5%, since after the additional issue the region’s share decreased from 50% to a blocking share) ended up on the balance sheet of Vneshtorgbank.
French Total has been interested in this asset for a long time. However, she tried to reach him through cooperation with Astrakhangazprom in the field of increasing the productivity of the main part of the Astrakhan field. Corresponding proposals were made in 2005. Realizing that it was unrealistic to obtain a share in a 100% subsidiary of Gazprom, the French seriously hoped to obtain permission to purchase the right bank site.
Nevertheless, last year, Ukrainian businessman Dmitry Firtash almost bought 100% of the shares of the Astrakhan oil and gas company (he even managed to acquire a stake in VTB and was named the winner of the tender for a stake in regional authorities). But after the intervention of the Kremlin and Vladimir Putin personally, the deals were reversed. It was assumed that either Gazprom or its affiliated structures would buy the shares as soon as they understood what to do with the right bank section.
It is obvious that Total, which now has good contacts with the Russian monopolist, but was never able to become the owner of the reserves of the Shtokman field, could resume interest in the Astrakhan assets. Moreover, the price environment in the medium term makes even the most expensive mining and processing projects attractive.
The companies did not disclose details of the negotiation process.