RUSSIA - The Joint Ventures

There are two categories of producing joint ventures: JVs operated by foreign companies, like Polar Lights of Conoco, which produce over 400,000 b/d of oil, and JVs operated by Russian companies. The Russian-operated category consists

of Ortneft, Vatoil, LUKoil-AIK and Yoganoil, together producing about 100,000 b/d of crude oil and condensates.

Polar Lights: A 50-50 venture between Conoco (operator) and Arkhangelskgeoldobycha (AGD), Polar Lights (PL) is the first JV involving a foreign company in Russia. The JV was formed in December 1991. Its task was to further apprise and develop oilfields which AGD had discovered. Its first oil flowed from the Ardalin field in Timan-Pechora. Discussions on Ardalin had begun in the late 1980s. Now the JV is producing 30,000 b/d, up from 25,000 b/d in mid-1996.

PL has been the largest single investment from the West in Russia's petroleum sector. The two PL partners equally share both investment costs and the resulting profits. The area licenced to PL is in the Nenets Autonomous okrug (sub-region) some 125 km south of the Barents Sea. The JV area contains four oilfields known as the Ardalin Complex - named after the largest of them, Ardalin, which contains over 110m barrels of recoverable 33.5 deg. API oil. It produces from a 10 sq km Famennian (Upper Devonian carbonate) reservoir at a depth of 3,200 metres. Three satellite fields, Oshkotin, Kolva and Dysushev, which contain 20m barrels of recoverable oil, are being developed. Ardalin, under further development, is located in the Arctic tundra, some 1,000 miles north-east of Moscow. In winter the temperature often falls to -60xC, harsh winds are frequent and daylight hours are very short. In the summer months the tundra becomes very marshy. Special considerations are necessary to operate in these conditions without damaging the fragile environment. A 200,000 b/d pipeline is under construction there.