Salym Petroleum

DISCOVERING NEW HORIZONS

Salym Petroleum Development (SPD) is a 50/50 joint venture company of Shell and Gazprom Neft.

Established in 1996, SPD is developing the Salym group of fields in Western Siberia, which includes Upper Salym, Vadelyp, and West Salym oilfields.

Total recoverable resources are 140 million tons. The Salym Project is among the largest projects involving foreign capital in Russia’s oil producing industry.

The company started the development of the fields in 2003; as early as in December 2004, one year ahead of the deadline stipulated by the license agreement, it produced the first commercial ton of oil. In the summer of 2006, SPD became one of Russian oil companies with an annual production exceeding 1 million tons. In 2011, the company has reached the peak level of oil production by setting a daily production record of 24,597 tons. In 2013, SPD’s annual production was about 7 million tons.

Over the years of Salym Project execution, SPD has drilled over 900 wells and produced over 52 million tons of oil.

The company actively applies state-of-the-art well construction, oil production, industrial safety, and environmental protection technologies. Thus, SPD was the first in Russia to equip the entire well stock with Smart Fields remote monitoring and control system. Usage of modern Russian drilling rigs and advanced managerial solutions made it possible for the company to substantially reduce well drilling and completion time.

A vivid example of application of stateof-the-art technologies and efficient private-public partnership is the execution of the associated petroleum gas (APG) utilization project.

Within the scope of this project, an APG processing plant has been constructed on the Salym group of fields, which made it possible for SPD to become one of the first companies in Western Siberia to utilize this valuable natural resource to the level of over 97%.

SPD draws a particular attention to Health, Safety, Security and Environment (HSSE). SPD has developed a balanced HSSE management system. This system is based on the statutory Russian requirements and international practice. SPD holds certificates of compliance with international standards in environmental safety (ISO 14001:2004) and industrial and labour safety (OHSAS 18001:2007).

SPD is currently executing pilot project for implementation of two game-changing technologies application of which may substantially influence the development profile of oil industry in the region and the entire country.

The first project envisages the development of the Bazhenov formation by way of construction of horizontal wells and performance of multistage hydraulic fracturing on them. The company is currently constructing five appraisal wells; the results of their operation will make it possible to evaluate the Bazhenov formation potential and make a decision of its further development. The second project is chemical flooding on the basis of a threecomponent mixture of alkali, surfactant, and polymer (ASP). This technology makes it possible to increase oilfield development efficiency manifold by producing up to 30% additional oil.

The Salym Project execution is materially beneficial for the economy of the region and Russia as a whole: additional jobs are created, new opportunities for local businesses arise, tax revenue increases.

Thus, Russian companies account for over 80% of the total cost of work on the project, while 20% of total orders are awarded to contractors in the Nefteyugansk District. Since 2003, SPD has paid over 250 billion roubles of taxes to the Russian budget.

Since the first days of the Salym Project execution SPD has been contributing to the social sphere development in the region. Since 2003, the company’s social investment exceeded 800 million RUR. SPD is funding a variety of programs in ecology, small and medium business development, healthcare, education, culture, and sports.

By executing road safety and entrepreneurship development projects, providing education grants for school students and microloans for small business, organizing social project contests, and implementing many other programs, the company has become the conduit for socially responsible business in the region.

Thanks to SPD, a new kindergarten was constructed in Salym, flower and furniture shops opened, the local hospital received modern medical equipment, schools got computer classes and multimedia equipment. In particular, the company has been conducting a competition for higher education grants among local school graduates since 2006. Over the years of project execution, SPD has already provided over 50 grants for education at leading universities of the Ural Federal District. Since 2014, thanks to the agreement with the Gubkin Russian State University of Oil and Gas, Salym graduates have an opportunity to study at the leading Russian oil and gas university.

Š2014 Salym Petroleum Development N.V. www.salympetroleum.com