As Offshore Oil Prospects Expand, Putin Calls for More High-Tech Ships

ST. PETERSBURG, January 10 (RIA Novosti) – Russian President Vladimir Putin on Thursday called for his country to boost its production and design of high-tech ships, in comments at a naming ceremony for a new oil-rig supply vessel with icebreaking capability.

“We already have the world’s largest nuclear-powered icebreaker fleet,” Putin said. “Let’s work on building an entire range of [high-tech] vessels.”

The Vitus Bering supply ship, which will operate on a long-term loan to a subsidiary of Exxon Mobil, was built by Finland’s Arctech Helsinki Shipyard and Russia’s Vyborg Shipyard JSC, and accepted for operation in December last year. Putin said he was pleased to note that Russian shipbuilders made 90 percent of the vessel’s hull.

The ship is the first in a series of auxiliary vessels with icebreaking capability designed to supply offshore oil platforms in Russia’s northern territorial waters. It was not clear how many vessels the series would include, but construction of a second ship is expected to start this year.

The development of a large fleet of vessels capable of operating in heavy sea ice is imperative for the successful exploration not only of Russia’s existing oil and gas reserves, but also its prospective reserves in the Arctic.

According to shipbuilders, the auxiliary vessels will feature an advanced propulsion system, a special hull design to operate astern – simply put, to move backwards – in ice conditions and a global positioning system. They can safely operate in ice 1.7 meters (5.5 feet) thick.

Exxon Neftegas Limited will use the Vitus Bering, owned by Russia’s state-controlled Sovcomflot shipping company, for work on the Sakhalin-I oil-and-gas project off Russia’s Pacific Coast.

After Thursday’s ceremony, Exxon Neftegas Limited president James Taylor estimated that oil production at Sakhalin-1 in 2013 will be about 7 million tons, close to last year’s figure.

Also on Thursday, Sovcomflot and Russia’s United Shipbuilding Corporation (UAC) signed a general agreement on cooperation in the construction of multipurpose auxiliary vessels with icebreaking capability.

While such capabilities are regularly required in the upper reaches of the Pacific, they could be needed even more important for work in the Arctic.

Arctic territories, believed to hold huge untapped natural resources, have increasingly been at the center of conflicting territorial claims involving the United States, Russia, Canada, Norway and Denmark in recent years – particularly, as rising temperatures lead to a reduction in sea ice, providing access to lucrative offshore oil and gas deposits.

Russian experts estimate recoverable oil and gas resources on the continental shelf at 100 billion tons of oil equivalent.

Russia plans to spend around 1.3 trillion rubles ($44 billion) on economic and social projects in the Arctic by 2020, while total investment in Arctic oil exploration in Russia would amount to $500 billion through 2050, according to officials.