- Dmitriy Nikolayevich, the Yamal is known in the world primarily for its energy reserves, natural gas, and oil. These areas attract the largest portion of investments, including foreign ones. Do new players still have any chance of entering this market? Or is the list of partners closed?
- The list of partners may not be closed. New possibilities are just formed here. Today over 50 large fuel and energy companies and more than 150 structural subdivisions operate in the region. The Yamal peninsula is currently being actively developed. The largest Bovanenkovo deposit and a modern gas pipeline are going to be launched next summer. The mining sector and the oil, gas, and chemical sector continue to be formed in the Polar Ural; the Yamal-SPG arctic project is implemented as well. Total energy corporation (France) is the Russian company’s partner in the latter project. So, there may appear new players for project implementation and I do not rule out development of the arctic shelf. Here in the Yamal, we also have best practices of admitting small and medium-sized businesses to participation in the fuel and energy projects. This mainly relates to oil deposits.
- Do you mean deposits, which are becoming unattractive for large businesses?
- Yes, I do. Look, “black gold” is currently extracted on 53 deposits of the Yamal, and most of them are at the phase of falling extraction. The non-operating fund of drill holes of only one of the oil companies in the District amounts to more than 5.5 thousand units. One drill hole may generate up to one thousand tons of oil annually. The District has slightly less than 7.7 thousand drill holes, i.e. oil underproduction in the District reaches 7 thousand tons or so annually. Development of such fund is not profitable for large companies due to the existing taxation burden. We propose to solve this problem by the law “On development of small and medium-sized businesses in the oil and gas sector of the Yamalo-Nenets Autonomous District” and apply it to mineral developers as regards mandatory provision of non-profitable drill holes for use. I am confident the number of companies will grow.
- You have mentioned the following extraction volumes. Is this trend typical of the oil sector only? Do gas reserves give rise to no trouble?
- The horizon of explored reserves is 200 years. But as we are careful masters and guarantors of environmental safety in the region, we actively resolve the problem of rational use of reserves. Extraction volumes are increasing with each new project being implemented, but replacement is quite slow, if not lagging. Geologic exploration is performed at quite low paces. Although it is abundant in resources, the Yamal remains practically unexplored. However, we have increased the level of geologic exploration this year. There are also certain conditions for mineral developers, which come to a territory and develop it in a comprehensive manner: they start with exploration and end with remediation.
I have been often asked recently what I think of renaissance of the Rosgeologia (Russian Geological Institution). I think this is a good idea. Our research institutes are experienced and possess technologies that are no worse than those used by foreign companies. We owe today’s volumes to our geologists of past years. As a descendant from a family of geologists, I believe that it is high time we remembered everything and went on the scout with the help of our Russian companies. All in all, the country’s storeroom information belongs to national security-related one.
I also believe that the most efficient solution to problems of underdeveloped geologic exploration consists in restoring a system of mandatory payments by mineral developers for the purposes of mineral and raw material base reproduction (MRMBR), which might generate approximately RUB 1.5 billion for the region. Restoration of this tax will make it possible to use the total fund for exploration of the territory with the highest strategic importance both for the Yamal and Russia.
- Can you name indicators of geologic exploration in the area?
- For a couple of years, we have considerably progressed as compared to the last few decades. 2011 can be viewed as the year in which the Lutseyakhskoye deposit and 30 new fields on previously identified deposits were discovered. As regards geological exploration, we have progressed in every aspect: drilling – 209.2 thousand long meters or 121% year on year; seismic exploration operations by the 2D method: 10.3 thousand long meters or 280%; seismic exploration operations by the 3D method: 10.2 thousand square kilometers or 131% against 2011.
Innovative agricultural sector in the Arctic
- Is the problem of associated petroleum gas (APG) resolved in the Yamal?
- In fact, this is another problem which is troublesome for other regions as well. The world’s best experts try to find a solution. At present, 22% of APG is burnt in flares: about 2 billion cubic meters. We estimate that “losses” may total a dozen of billions of cubic meters over the period from 2012 to 2015.
And it is not about a leak of billions only. The environmental aspect is the most important one. Millions of tons of harmful substances go to the atmosphere after burning. Few have reached the level of 95% of APG so far. We have a proposal that is quite viable. As mineral developers use irrationally the liquid raw material such as associated petroleum gas, we could legally stipulate that the Government is the owner of APG and make the mineral developer hand it over to the region as an important investment component. Afterwards, the region decides what to do with it and the governor of the territory, being a guarantor of economic and environmental wellbeing, seeks variants and projects of appropriate use of APG.
- What about the industrial impact on the tundra? The Yamal area is the habitat of the world’s largest deer. This is another local precious resource.
- Yes, it is. Russia’s largest herd of northern deer grazes in the Yamal: almost 700 thousand deer (53% of the total Russian deer and 35% of the global livestock population). Last year, RUB 23 million of the District budget was allocated to support brood deer breeding. By the end of the year, we produced about 7.5 thousand tons of meat. In the beginning of this year, within the framework of the international agricultural exhibition “Green Week” held in Berlin, we signed contracts to supply venison to Finnish company Lapin Liha OY ad German company Geti WilbaGmbH & Co.KG. We have offers from Swedish company Polarika, which will be considered in the future. The Yamal is the only Russian exporter of venison to Europe. And this is an important resource of the region, indeed.
Naturally, aggressive mineral development has impacted deer breeding. A couple of decades of oil and gas extraction have affected grazing lands, and the deer population started to become smaller. This is a fact. Fortunately, specialists have noticed for the second year in a row that deer are putting on weight. I think this is a direct proof that technologies and methods have changed, and the general attitude to the interests of indigenous small peoples of the North with which companies are working today has been changed as well.
I can cite an example: the Bovanenkovo deposit is currently being actively developed; its launch is scheduled for next summer. Gazprom decided to stop any traffic of large size transport vehicles and equipment in the migration season on the way of deer wandering. Another example: the Yamal strategic highway Salekhard – Nadym is built by taking into account the interests of deer breeders. Descents will be made in places of the highway crossing. And we have been following our own Yamal rule for many years: a road traffic police blocks car traffic when receiving a phone call from a deer breeder that a herd is approaching the road.
- You state that agricultural projects are implemented today in an innovative way. What do you mean by that?
- The slaughtering and processing complex “Yamal Deer” in the village of Yar-Sale of the Yamal District is included in the register of animal products exporter to the EU countries. But this is not the only priority area for us. We are also planning to extend our processing possibilities and propose to build deep processing complexes on the Tazovskiy and Gydanskiy peninsulas. The Yamal indigenous peoples process deer at the level of 100%. Their experience plus modern technologies open new possibilities for creating a complex of environmentally friendly waste-free production facilities.
For example, preparations made from velvet antlers and deer blood are actively used in the pharmacology and in production of biologically active additives. Companies producing medicines in the District permit to reduce their net cost, increase the production output, and fill both the Russian and foreign markets. According to experts, entry to the Korean market alone will generate profits of up to USD 10 million annually, which will make it possible to recover investments in production organization within the shortest time periods.
All of these products will increase revenues tenfold and even hundredfold as compared to primary processing products. But the most important aspect for me is as follows: new companies will have a multiple socio-economic effect as a result of developing related sectors and rural areas of the Yamal, creating new jobs.
- You have mentioned introduction of the world’s latest technologies in the YNAD agricultural sector. Will specialists be engaged as well?
- In no case. We are talking today about the arctic village renaissance, and all that we are planning and developing concerns only the Yamal specialists. I understand that people need to be trained to use such technologies. This is why new specialists for the agricultural sector meet the new requirements of highly qualified management according to global standards, which are ready and able to efficiently solve any problems and manage agricultural companies in the international market environment.
The leading specialists have been trained in the training center of the Saam region in Finland, improved their qualification in Canada, Norway, and other countries. We will offer grants for training of talented young people in the best agricultural universities of China, Korea, Japan, Canada, Switzerland, England, and the USA.
- Since last year, a new bio resource preservation program has been implemented in the Yamal. Last year, you ordered to identify and liquidate the poacher nets, the booty of which is estimated to reach approximately five hundred tons of ciscos annually. Are there any results?
- It is impossible to resolve such as problem within a short time period. Poacher nets have been installed for decades. Poachers were protected at various levels. Resources were controlled by the federal authorities, whose inspecting structure could not resist a well-organized business in terms of quantity and equipment. At the federal level, we proposed to pass appropriate powers to the region. The issue is progressing, but it has not been solved yet. But we will not divert from the selected way. At present, the number of joint interdepartmental raids has been increased. There is some effect.
But the problem is not that easy after all. We all know that the local population is involved in this business. An elderly man told me once: “Son, you should not be so eager to punish us for poaching. At first, you had better create normal conditions for us so that we could earn well in the summer to survive in the winter”. And I understand that he is right after all. Why do local people expose themselves to risks and get involved in poaching? It is because normal jobs are unavailable. For this reason, we decided to found a special refrigerator “river-sea” fleet that will go to the remotest settlements and factories to collect legal take from fishermen. The first ship Num was successfully tested last year in the Gulf of Ob. People will be able to sell fish and earn money. In the summer, people should earn enough to survive in the winter.
There are some achievements in our fight against poaching. Local people will be involved in public control to help inspectors. We have even founded a medal “For fighting poaching”. We will solve this problem.
- Can food security problems be resolved in the Far North? What else can be made or grown in the Yamal, apart from fish and venison?
- The food security program was adopted in the District in summer of 2011. This is not just a concept; this is a program of actions based on experience existing in our region regarding cultivation of our own food products, in particular vegetables. We will not be able to grow wheat, but we can grow potatoes. The greenhouse development projects can be implemented in any area. And we will create conditions and support them financially. The Yamal used to have good farms. We used to freeze our own milk and supply it to the entire District. Our breeders propose good projects and we should implement them. Let us look at fen-berries. By using certain technologies, we will be able to grow them all-the-year-around just as all other vegetables.
In the center of the circumpolar world
- This year, Salekhard will host several international events dedicated to the Arctic. The summer conference will gather congelation researchers from all over the world; the III International Arctic Forum “Arctic – Territory of the Dialogue” dedicated to environmental safety is scheduled to be held next fall under the auspices of the Russian Geographic Society and Vladimir Vladimirovich Putin. Why a city on the polar circle is the center of such representative events?
- You certainly know that 2012 is a year of “arctic” anniversaries. The world’s wildlife fund declared it to be the Year of the Arctic. And our objective is to be in the center of these events, or, as the saying goes, “keep our eye on the ball”, taking into account that we are currently forming a platform for a dialogue of all countries interested in developing the Arctic storeroom.
Why Salekhard? The District capital has a unique geographic location and it is not about the symbolic Polar Circle only. We have planned to create here a large international center of Arctic research. The environmental issue is the key one in the Arctic development. Any accident in northern seas could lead to unpredictable consequences. It will not even be the Mexican Gulf. We are aware of it all, and this confirmed by our colleagues from other countries.
The debatable, research, and scientific Expo-Arctic is supposed to gather all the scientific achievements on one platform, which are capable of working in a difficult natural environment. From here, i.e. the Polar Circle, any researcher will be able to reach any deposit and see the way technologies are applied. Within the next five years, the Arctic will have the most developed arctic infrastructure. In this period, we plan to host the first Arctic Summit. I am confident that this year’s events will activate cooperation with the Arctic Council, research institutes, and the circumpolar world countries.