OREANDA-NEWS. February 15, 2008. Dry gas produced from associated petroleum gas, whose burning, according a draft resolution of the government, will cost oil companies 46 times more than now beginning from 2009 and 113 times more from 2011, should be given high priority access to gas distribution networks on a legislative basis, said the head of one of the gas departments of TNK-BP, reported the press-centre of TNK-BP.

“Dry gas obtained from associated petroleum gas must have high priority access to gas distribution networks,” said Mikhail Gordin, Director, Associated Gas Projects Department, TNK-BP, to journalists on February 13 at the meeting of the Public Council at the Federal Ecological, Technological and Atomic Supervision Service of the Russian Federation (Rostekhnadzor).

He explained that “oil companies can themselves construct the required number of gas gathering networks and gas processing facilities, but they have to be assured that their gas will have free access to the gas transportation system at normal prices.”

Such assurance may be provided, in Mr. Gordin’s opinion, “either by long-term agreements or by high priority access granted on a legislative basis.” According to him, such guarantees are absolutely necessary for oil companies to comply with the associated petroleum gas utilization norms prescribed by the draft resolution of the Russian Federation Government.

Mr. Gordin pointed out that all oil companies have facilities for processing of associated petroleum gas and separation of dry gas, but they do not wish to increase the production capacity of these facilities because there is no guarantee of long-term access to gas distribution networks. “Gazprom may accept gas for transportation at its own disposal, or it may not,” noted he.

State Regulation
Mr. Gordin said that the reaction of oil companies to the draft resolution of the government that abolishes state regulation of prices for associated petroleum gas subject to processing is very positive. “State regulation only increases the risk for economic entities,” emphasized he. At the same time, he does not expect any practical effect from this document, because the market of products of associated petroleum gas processing today is limited, first of all, by the possibilities of their sales.

“The problem of associated petroleum gas is primarily a problem of rational use of natural resources rather than only an environmental pollution problem,” said Mr. Gordin. “This is why we – oil companies – insist that issues of associated petroleum gas processing should be reflected in field development plans,” added he. According to Mr. Gordin, these issues must first of all be in the jurisdiction of the Ministry of Natural Resources.

As became known on Wednesday, the actual payment for burning associated petroleum gas will increase 113 times beginning from 2011, when the decision on raising the payment for burning more than 5% of produced associated petroleum gas comes into force according to the draft resolution of the government developed by Rostekhnadzor.

The document presented at the meeting of the Public Council prescribes that the payment for exceeding the pollutant emission limit should be increased beginning from January 1, 2009 for burning more than 15% of produced associated petroleum gas and from 2011 for burning more than 5% of produced associated petroleum gas.

Konstantin Pulikovsky, Head of Rostekhnadzor, said earlier to the press that the goal of the Federal Ecological, Technological and Atomic Supervision Service of the Russian Federation is to increase utilization of associated petroleum gas up to 95% by 2011. According to Rostekhnadzor, the average percentage of associated petroleum gas burned in flares in Russia is currently 25%.

Yuri Trutnev, Minister of Natural Resources of the Russian Federation, declared that the Ministry will require closure of oilfields for incompliance with the associated petroleum gas utilization norms.

Ecologist Vladimir Grachev, Chairman of the Public Council at the Federal Ecological, Technological and Atomic Supervision Service and former Chairman of the Environmental Committee at the Fourth State Duma (Parliament of Russia), said earlier to the new agency Novosti that the oil industry accounts for most emissions into the atmosphere due to the low level of utilization of associated petroleum gas. According to Mr. Crachev, emission of associated petroleum gas burning products into air may be decreased through economic measures encouraging oil companies towards integration of new methods for rational utilization of associated petroleum gas.