Novatek asks for support to develop hard-to-recover gas reserves, PM draws attention to demand, available technologies

TYUMEN. April 14 (Interfax) - Novatek asked Russian Prime Minister Mikhail Mishustin to create incentives for the development of hard-to-recover gas reserves, while the head of the government believes that the issue should be discussed considering forecasts for gas demand and the availability of development technologies.

"The Nadym-Pur-Tazovsky district in the Yamalo-Nenets Autonomous District is the main gas production area, and the main share of production is fairly simple gas. Moreover, this production is declining, and it needs to be replenished from great depths, from more complex geological horizons," the head of the gas producer's research center Novatek STC, Vladimir Solovyov said during Mishustin's visit to Tyumen.

"In this regard, given the already existing infrastructure there, cities, I mean both fishing infrastructure and transport infrastructure, I would like the government to create some incentives so that it would be possible to start developing hard-to-recover reserves from deeper horizons and keep this production at a stable level so that the region does not fall into decay," Solovyov said.

The prime minister noted that "the issue is complex."

"You're absolutely right, we need to think about how to preserve collectives, coordinated collectives that traditionally work in these cities, competency centers, if you will. But as for hard-to-recover reserves, there's the question of demand here [...], to what extent demand will meet [supply]," Mishustin said.

"Export possibilities, although they were built up, right now you see they are, unfortunately, falling, because with exports - I need hardly tell you what's happening. This means we need to increase gasification domestically - the presidential project, where we work on gasification. And, of course, we need to look carefully at how [advisable this is] in terms of the environment and capabilities," Mishustin said.

He also noted the availability of technology for developing hard-to-recover reserves. "These technologies are probably a critical link, you know this very well yourself," Mishustin said.

Energy Minister Nikolai Shulginov said at the meeting that "in general the Energy Ministry supports the need to develop hard-to-recover reserves," and noted that there is a federal project for such oil reserves. "We need to look at what to do with support with projects to develop hard-to-recover gas reserves. In general we support, but we need to take a look - what technologies, how much they cost," the minister said.

"Import substituting technologies that will make it possible to do this in Russia are also a very important issue," Mishustin said.

Novatek deputy CEO Vladimir Kudrin, speaking with reporters, said that Cenomanian, easy to extract gas is gradually running out.

"In order for us to have production at a constantly high level in the Yamalo-Nenets Autonomous District in the long term, we need to tap hard-to-recover reserves, something on which we have made very good progress. We know about this, because we're sounding the alarm early. High-tech equipment is used here. We need preferences because these deposits are gradually becoming unprofitable, because expensive processes are underway to recover them," Kudrin said.

Russia produced about 60 billion cubic meters of gas from hard-to-recover reserves last year, of which Novatek produced 23 bcm, he said.

Preferences granted for hard-to-recover reserves of oil should be extended to gas, he said. "This applies to all resource developers, not just Novatek," Kudrin added.