How do the world's largest oil majors find working under Russia's environmental regulations? The story of the French-Belgian major, TotalFinaElf, has been a successful one in Russia. TotalFinaElf is developing the Kharyaga oilfield in northern Russia under a production sharing agreement. Recoverable reserves at Kharyaga are estimated at over 160 mln t (1.06 bln bbl). The PSA envisages production of 45 mln t (297 mln bbl) over 33 years. In a recent interview with OGE, TotalFinaElf General Director for Russia, FranÓois Rafin, said that environmental laws are getting stricter both in Russia and abroad. However, that shouldn't scare those companies that abide by the regulations, he added.
Oil Gas Eurasia: What is your opinion with regard to the draft law on 'ecological payments' (pollution fees)?
Francois Rafin: The draft law on ecological payments foresees the payment of penalties for infringements of ecological regulations. It is now under discussion and I cannot comment on the details. In principle, this draft law should not be unfavorable to operators that respect the environment.
OGE: How does TotalFinaElf view Russia's existing environmental regulations? What are the chief obstacles that the company faces in this area?
Rafin: In Russia, TotalFinaElf strictly respects Russian environmental regulations, and it also respects international standards. So far, we have not experienced any practical situation where it was not possible to achieve this double objective. We allocated significant resources in order to become fully acquainted with the Russian regulations and with their implementation in all upstream activities like seismic acquisition, drilling, construction, and production. We also adapted our engineering specifications, and our operating procedures to the Arctic context where the protection of the permafrost and the tundra requires specific measures. This significant investment in know-how permits TotalFinaElf confidently to explore and develop oil and gas fields in the deep offshore and in the Arctic regions of Russia.
OGE: What specific payments is the company charged under current legislation for polluting the environment - how are they calculated?
Rafin: Our Kharyaga field is developed according to the principle of minimum ecological impact. We re-inject all production water. We re-inject the associated gas in very deep formations with the sole goal of avoiding gas flares. Only a fraction of the associated gas is burnt as fuel gas in the process heaters and in the gas turbine generators. To avoid any use of water from the rivers, we have drilled water supply wells to deep aquifers. We minimize the footprint on the tundra by drilling extended reach wells, grouped in clusters. We pay fees for the fuel gas, for the water pumped from the aquifer and for the use of land and quarry sand. These are fees for the use of natural resources rather than for pollution, reflecting the minimal environmental impact of the project.
OGE: What amount of TotalFinaElf's budget is spent annually on environmental issues?
Rafin: Environmental protection is so deeply ingrained in our design and our operation that it would be difficult to extract the environment premium applied to a well-built and operated plant. At the very least we can measure the proportion of expenditure that is specifically and solely dedicated to environmental protection. For phase 2 of the Kharyaga field development, expenditure committed solely to environmental protection represent 15 percent of overall investment. This includes, for instance, the system of HP gas compression, gas dehydration, gas pipeline and gas injection wells. In return, we contribute very significantly to decreasing greenhouse gas emissions. But as important as the cost, is the timing. On the Vankor field in the Siberian Arctic, just as on the Shatsky Ridge in the deep offshore Black Sea, the very first contract that TotalFinaElf ever signed was for environmental surveys. That tells you a lot about our priorities!
OGE: How would you describe Russia's legislation in this area in comparison to the legislation of other foreign countries where TotalFinaElf operates?
Rafin: The Russian legislation is comprehensive and it usually sets high standards. However, it is difficult to directly compare the EU's regulations with Russia's regulations because the methodology is so different. For example, if you calculate NO2 emissions, the area classification, the distance and the duration to be used are different in each system. So, TotalFinaElf systematically verifies compliance with both international and Russian regulations. We also refer to the Kyoto protocol and to the Gothenburg protocol. Overall, it would be difficult to say whether Russian norms or international norms are stricter. I believe that often the most recent norm is stricter, wherever it originates.
OGE: How would you describe TotalFinaElf's cooperation with Russia's Natural Resources Ministry and other authorities with regard to environmental issues?
Rafin: The authorities, both at the federal level and in the regions, include highly qualified experts with an extensive knowledge of the regulations, and of technique. As there are a considerable number of environmental dossiers to be approved at the various stages of design, construction, commissioning and operations, TotalFinaElf teams work in continuous relationship with the authorities, and with the environmental institutes. They meet several times a month, including on-site inspections. TotalFinaElf specialists also work with agencies, institutes and universities like the State Polar Academy to develop new technology, such as in-situ oil bio-degradation. They jointly report the results in seminars in Moscow and in the regions, where an ever-increasing interest in environmental protection is apparent.