Safety of the Arctic Zone, northern territories and offshore facilities

Arctic

The safety of production activities in the Arctic Zone and northern territories is closely monitored by the public, due to the high risks related to upsetting the ecological balance in these locations.


Arctic

Total area:

29.8 million sq. km


Land area:

14 million sq. km.


The population includes

30 different peoples


Flora

20 thousand species.


Fauna

>180 species.

The Company, in accordance with its industrial and environmental safety policy, seeks to minimize the impacts of LUKOIL Group entities’ activities on the climate and biological diversity of vulnerable areas, including the Arctic Zone of the Russian Federation.

Arctic Zone countries:

  • Russia
  • The United States
  • Canada
  • Denmark
  • Iceland
  • Norway
  • Sweden
  • Finland

In Russia, the Arctic ZoneAn expansion of the boundaries of the Arctic Zone in the Komi Republic is being considered. comprises not only the continental shelf and islands in the Arctic Ocean, but also the territories (or part of them) of eight Russian regions, in three of which LUKOIL conducts operations. The Pyakyakhinskoye and Nakhodkinskoye fields, LUKOIL’s main gas assets, are being developed in the Yamal-Nenets Autonomous Area, while in the Nenets Autonomous Area LUKOIL extracts oil and natural gas. The village of Varandey is home to Russia’s northernmost oil and petroleum product shipping terminal.

To enhance the safety of production processes cutting-edge technologies are used, including pitless drilling and safe production methods for hard-to-recover oil reserves (HTR reserves). We use pipes with internal protective coatings, external heat-insulating and water-proof coatings, and electrical heating for pipes. Field pipeline routes are inspected from helicopters.

In 2019, for the second consecutive year, LUKOIL made the top three (it ranked first in 2018) based on the results of the Polar Index rating (managed by the Project Office for the Development of the Arctic and the Economics Department of Moscow State University), which assesses the sustainable development of companies working in the Russian Arctic. Read more in the article.

Varandey

The Varandey Terminal comprises two interconnected facilities located onshore and offshore in the Barents Sea. Oil is stored in coastal tanks for subsequent shipment to ships through a stationary, ice-resistant marine loading berth located 22 kilometers from the shore. Varandey has extensive experience in year-round marine transportation of large volumes of oil under icy conditions and wave loads. Given the high risk of an accident in icy conditions, the design and construction of the terminal was based on a state-of-the-art design and technical solutions which were adopted in Russia for the first time:

  • the environmental safety system of the shipping berth has three levels of protection and operates in an autonomous mode;
  • oil shipments are automatically shut down in an emergency;
  • specially strengthened double-hulled tankers were built, which can carry oil shipments all year round;
  • the tank farm premises are ringed by a reinforced concrete fence that prevents any release of oil products into the environment in the event of damage to the tank.

Oil is supplied from the shore terminal to the loading berth in a cyclical manner via two lines of subsea pipelines, which facilitates the continuous heating of the oil and prevents it from freezing inside the pipe.

We place a special emphasis on the prevention of emergency situations and on developing the skills necessary to eliminate potential spills in icy conditions. In accordance with approved Oil and Oil Product Spill Prevention and Response Plans, special vessels with equipment for emergency management (under a contract with professional emergency rescue teams) are on 24-hour duty at all offshore facilities of LUKOIL Group entities.

Cooperation agreements have been signed with other companies working in the Arctic Zone, which facilitates the development of optimum joint operations to eliminate potential oil spills.

In order to protect the environment, technological processes are automatically monitored to ensure the detection of potential leaks of pollutants in real time. Devices are used to shut down emergency process equipment. A system to continuously monitor the impact of production on the environment is in place.

No significant incidents have so far occurred during the 11 years of operation of the terminal.

Another northern region in which LUKOIL works is Norway. While not the system operator, LUKOIL Overseas North Shelf AS is a participant in two license projects on the Barents Sea shelf. At the time of preparing this Report, both projects were in the exploration stage.

LUKOIL Overseas North Shelf AS ensures high standards of operations in accordance with the recommendations of the KonKraftKonKraft is a platform for interaction between state authorities, oil and gas companies, and the industry association, whose main purpose is to come up with mutually beneficial solutions to enhance the competitiveness of the industry through coordinated approaches, including in the field of safety, environmental protection, and climate change. report “Competitiveness – a changing tide on the Norwegian continental shelf.” The document standardizes the approaches to interaction among operators of oil and gas production projects and third-party service companies. The requirements of KonKraft have been taken into account in the management system of LUKOIL Overseas North Shelf AS and its emergency response program.

In accordance with Norwegian law, when preparing for well construction the project operator, on behalf of all partners (participants), sends a package of documents to regulatory authorities, which contain comprehensive information on the volume of expected emissions, the quantity and concentration of chemical and pollutant discharges, and other data.

The documents are discussed at a public hearing attended by representatives from Greenpeace, the Norwegian Directorate of Fisheries, the Norwegian Institute of Marine Research, the Norwegian Polar Institute, and other stakeholders. LUKOIL presented information at the hearing on its corporate principles and experience in implementing environmental protection and industrial safety measures when implementing projects in Russia and abroad, including the zero-emission principle.

As a participant in offshore exploration and production projects, LUKOIL Overseas North Shelf AS takes into account best practices in reducing emissions and gas flaring. A decision was made to electrify onshore and offshore facilities, which contributes to the reduction of GHG emissions and prevents the use of gas turbines on the shelf. To avoid associated petroleum gas flaringAssociated petroleum gas flaring is prohibited on the Norwegian shelf, except in emergency situations (emergency flaring)., gas injection is used to enhance oil recovery or for underground storage (in the absence of economically viable gas transportation to consumers).

The projects use modern technologies to ensure safety and to boost energy efficiency. Digital solutions are being actively introduced into production processes, and modern software products are used in geological and geophysical studies and for well drilling.

LUKOIL Overseas North Shelf AS is an active participant in cross-industry initiatives and in projects in Norway aimed at reducing risks and ensuring responsible environmental activities in Arctic Zone projects, such as ACCES (2016–2019).

Norway