OREANDA-NEWS. May 23, 2012. Salym Petroleum Development N.V. (SPD), LLC  “Monolit” and JSC  NK RussNeft launched the liquefied petroleum gas (LPG) plant located in Salym group of oil fields in Western Siberia. When fully operational this facility, constructed and operated by LLC  “Monolit”, should now enable SPD and RussNeft to ensure utilization of their associated petroleum gas (APG). The official opening ceremony with the participation of the Governor of Khanty-Mansi Autonomous Okrug Natalya Komarova, Ambassador of the Netherlands Ron Keller, Ambassador of the United Kingdom Tim Barrow and other top-level guests, took place today in Khanty-Mansiysk.

To realize this project SPD, Monolit and RussNeft signed a tripartite memorandum of understanding on APG utilization in 2008. Under this agreement the parties agreed to create necessary infrastructure to ensure integrated processing of associated petroleum gas produced at Salym group of oil fields developed by SPD and Shapsha group of oil fields developed by RussNeft.

The total investment into this APG utilization project exceeds 10 bln rubles. Together with Roza Mira Group (main shareholder of Monolit) international financial companies such as EBRD, DEG and UniCreditBank took part in financing LPG plant construction.

Salym Petroleum:

Since the very start of the Salym project SPD paid a key attention to gas utilization issue and developed an extensive gas utilization program. This project covers two projects:

construction and start-up of a gas turbine power plant (PGP) which since 2008 has used around 1/3 of the AGP to generate electric power;

construction of liquefied petroleum gas (LPG) plant within the fields to bring utilization gas up to 95%.

“The LPG plant is a unique project of partnership between three companies and the government, and a genuine demonstration of the WIN-WIN principle.  – SPD CEO Simon Durkin said. – The project is not only important for the companies but for the region and for Russia as a whole. The project has multiple benefits, creating a new company, new jobs, reducing emissions to the environment and paying taxes to the government.”

JSC  NK RussNeft:

Development of Shapsha group of oilfields is an important strategic project for RussNeft. In 2010 at Nizhne-Shapshinskoye oilfield a project of gas piston power plant construction and start-up was realized to ensure oilfield with electric power and to increase the level of APG efficient use. In 2012 the compressor station is to be launched at Nizhne-Shapshinskoye oilfield, and a gas piston power plant – at Verkhne-Shapshinskoye oilfield. In June 2012 the Company plans to complete construction of gas infield pipeline of 52 km long from compressor station at Verkhne-Shapshinskoye oilfield to one at Nizhne-Shapshinskoye oilfield.

 “RussNeft pays special attention to the realization of programs aiming at increasing the efficient use of APG, production of natural gas, gas processing and gas energy, – told Mikhail Gutseriev, President of RussNeft. – Launch of LPG plant is a clear example of optimal engineering solutions, and it define broad opportunities to utilize APG at the level of 95%, improve ecology in the oil fields, ensure oil fields with electric power”.

“The LPG plant is an unprecedented facility for the Russian oil and gas industry that has no parallels in the country. The plant, of block-modular construction with capacity of 360 mln m3 per year, gets APG from the oil companies and processes it into dry gas used for power generation units of SPD and RussNeft and extracts propane-butane that goes to the market. Thus APG is not flared but fully processed contributing into sustainable use of natural resources. As a result of project execution, a full APG processing cycle was created to ensure both energy efficiency growth and carbon emission reduction. Moreover, the new business model is created, which can be applied at other small and medium size oilfields”, adds Andrey Nepomnyaschy, Monolit Executive Officer.