| And threatened with an outflow of investment The clarification of relations between the Ministry of Natural Resources (MPR) and the owner of the license for the Salym group of fields - the Salym Petroleum Development (SPD) company - continues. First, the Ministry of Natural Resources sent a notice to the developers about the possible suspension of SPD's activities at one of the group's three fields - Verkhnesalym, and yesterday company representatives announced that they had received another document from Vitaly Artyukhov's department. This time we are talking about revoking the license for all three fields of the Salym group. True, SPD hopes that the ministry will come to its senses and will not use such radical methods so as not to scare away foreign investors. However, in any case, SPD has less than three months left to resolve controversial issues with the Ministry of Natural Resources.
The group of Salym fields is located on the territory of the Khanty-Mansi Autonomous Okrug (KhMAO) and includes three blocks: the West Salym, Verkhnesalym and Vadelypskoye fields. According to various estimates, their total reserves are estimated at 80-120 million tons of oil. The development license was received by the Evikhon company in 1992, 82% of which is now owned by the English Sibir Energy. In 1993, Shell joined the project, and in 1994, Salym Petroleum Development was created on a parity basis. Initially, it was assumed that the project would be developed under the terms of a PSA, but in December 2002, after the parties realized that the agreement on the Salym group of fields would not be signed, they decided to begin its development on general terms. And at the end of April it became known that Shell and Sibir Energy signed an agreement to begin development of the West Salym field, while work was already underway at the Verkhnesalym field. In April, a meeting of the MNR expert group was held, to which documentation was presented for the entire group of fields. As a result, on July 7, the Ministry of Natural Resources sent an order to SPD to stop hydrocarbon production, drilling and development of fields in the Upper Salym part. The department believed that the development company had not fully implemented the field development plan approved in 1997.
Yesterday, SPD representatives announced that they had received a second order from the Ministry of Natural Resources, which applies to the entire group of Salym fields. SPD CEO John Fowler said. “The Ministry of Natural Resources notification about the suspension of economic activities at the Verkhnesalym field was received on July 16,” he said, adding that then a second one came. For now, the company hopes that the ministry will soon withdraw the notification. In particular, speaking about the contradictions that arose, for example the failure to implement plans presented in 1997, Mr. Fowler noted that SPD then presented other plans that cancel the provisions of the previous ones. So, according to him, the notice from the Ministry of Natural Resources does not fully reflect the picture of what is happening, and the company’s lawyers are now addressing this issue. True, the Ministry of Natural Resources states that the new development plans provide for the registration of changes to the license, but this was not done. At the remaining fields, plans were also not fulfilled - in particular, the level of production was lower than provided for in the license. True, SPD says that last week it submitted a revised development plan for the West Salym field to the Ministry of Natural Resources. The department confirms that it was received, but states that the document has not yet been fully studied.
Meanwhile, the head of the Shell representative office in Russia, John Barry, believes that the “attack” on the Salym field only scares off foreign investors. Earlier, Sibir Energy CEO Henry Cameron reported that his company and Shell intend to invest $700 million in equal shares in the development of the West Salym field. Of these, $100 million was planned to be spent in 2003, and the rest over the next two and a half years. The total investment in the development of three fields could reach $1 billion.
True, so far SPD is not incurring losses from the suspension of activities at the field. “The fact is that the Evikhon company is currently cleaning the oil pipeline at the Verkhnesalym field, and there is no production or wells being drilled there yet. This is not due to a notification from the Ministry of Natural Resources, but for technical reasons. This work will take about ten more days,” said Mr. Fowler. He also expressed confidence that the issue with the Ministry of Natural Resources will soon be resolved. Denis REBROV |
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