Chernogorneft

Location:

Russia

Project number:

3421

Business sector:

Natural resources

Notice type:

Private

Environmental category:

B

Target board date:

17 Dec 1996

Status:

Completed

PSD disclosed:

19 Nov 1996

Project Description

The project consists of an infill drilling programme and environmental action plan to be implemented by Chernogorneft in its part of the Samotlor field, one of the ten largest oil fields in the world.

Project objectives:

(i) To stabilise oil production of the company;
(ii) to optimise the oil extraction from the oil field and increase recovery of oil;
(iii) to undertake an environmental action plan including recultivation of contaminated areas and replacement of corroded pipes.

Transition Impact

(i) The financing of one of the most transparent Russian oil companies with good corporate governance will set an example for other corporations in Russia.

(ii) A substantial part of goods and services required for the implementation of the project is expected to be procured locally, bringing significant benefits to the region.

(iii) Part of the produced oil will be exported, bringing hard currency revenue.

(iv) The project will generate a significant amount of tax revenue for Russia.

(v) Implementation of a company-wide environmental programme will provide significant benefits to the environment.

The Client

Chernogorneft is an oil production company based in Nizhnivartovsk in western Siberia. Chernogorneft's activities are oil field development, oil production, and the transportation and sale of oil. It operates a number of oil fields, including part of the Samotlor field.

EBRD Finance

US$ 50 million loan (ECU 39.5 million equivalent). Up to 50 per cent of the loan will be presented to local and foreign commercial banks for syndication.

Project Cost

US$ 50 million loan (ECU 39.5 million equivalent).

Environmental Impact

The infill drilling programme will be carried out within the existing oil-field licence area, which is already operational. The operation was screened B/1, requiring an environmental audit and an environmental analysis, which were carried out by an independent environmental consultant, including a corrosion expert.

The environmental due diligence highlighted the key concerns associated with: corrosion of the pipelines; oil-contaminated land (415 hectares); air emissions; and occupational health and safety concerns arising from the company's activities. No significant issues specifically associated with the infill drilling programme were identified. The due diligence also showed that Chernogorneft has developed an internal environmental management system and is in the process of addressing key issues of concern. The EBRD's funding will accelerate the company's environmental programmes.

The company has established a well-organised and proactive programme for environmental and health and safety management. The company's environmental programme includes aggressive corrosion monitoring and prevention plans and a pipeline replacement programme (over 500 km during the next nine years). The 415 hectares of contaminated land will be cleaned and recultivated over a four-year period, with over 130 hectares and 22 mud pits scheduled for remediation in 1997.

The company separates oil from the associated gas and water in the field, and again before it enters the main Russian pipeline system. It utilises 99 per cent of the gas, and has eliminated flaring, except in the event of an emergency. All of the associated water is re-injected back into the reservoir to maintain the pressure and minimise the impact on the environment. The company has also minimised the area of land needed to be cleared for oil wells. It is using advanced drilling and waste management techniques to reduce or eliminate the need for mud pits. Further environmental improvement plans have been agreed with the environmental authorities.

The progress of the company's environmental programmes will be closely monitored by the EBRD. This will include routine reporting of environmental issues to the Bank and independent environmental audits.

Technical Cooperation

None.

 

Business opportunities

For business opportunities or procurement, contact the client company.

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