READ INSIDE:

HEROES OF EXTREME DEPTHSThe history of the manned submersibles in Russia

THE SHELF OBLIGESStrategy and tactics of oil and gas field development

№ 3 (16) 2013

HORIZONS OF CIVIL

SHIPBUILDING

FEATURE ONE:

Dear readers,

The issue of the United Shipbuilding Corporation’s magazine you are holding in your hands is mainly dedicated to the topics related to civil shipbuilding.

Vice President Dmitry Mironenkov reflects on its present day and the prospects for the production of offshore equipment in Russia.

The results of a recent International Maritime Defense Show (IMDS 2013) are clearly and convincingly summarized in the review written by Vice President, Doctor of Engineering Igor Zakharov.

The problem of Arctic and Far Eastern shelf development and the challenges facing our shipbuilding industry in this context are deeply analyzed in an interview with Yuri Shafranik, a prominent Russian oil expert, the chairman of the Union of Oil and Gas Pro-ducers of Russia.

An exclusive report by an ITAR- TASS correspondent in Rio de Janeiro describes instructive experience of Brazil that man-aged to provide the protection and integrated development of its shipbuilding industry, which is new for the country, in the WTO environment.

USC’s longtime partner, Director General of FSUE Atom-flot Vyacheslav Ruksha, tells about the program of building a new generation of nuclear-powered icebreakers — Russia’s trump card in Arctic development.

In this issue, we continue a series of review articles on renewa-ble ocean energy written by Anatoly Gorlov, head in this research direction at the Shirshov Institute of Oceanology (RAS).

Director General of Sevmash Mikhail Budnichenko shares Sevmash shipbuilders’ experience in the construction and com-missioning of Russia’s first ice-resistant fixed offshore platform Prirazlomnaya. Steel and titanium hulls of deep-sea submersibles and stations from the article dedicated to the 90th anniversary of domestic hydronautics look quite organically next to the mighty Prirazlomnaya.

We’ll be glad if your familiarization with our corporate publi-cation will be interesting and useful for you.

Sincerely,President of USC Vladimir Shmakov

CONTENT

«USC. STRENGTH AND POWER AT SEA» magazine №3(16) 2013Published by USC JSС

President of USC — Vladimir Shmakov

Address 11/1 Sadovaya-Kudrinskaya, Moscow,123242 RussiaTel.: +7 (495) 617-33 00Fax: +7 (495) 617-34 00

e-mail: info@oaoosk.ruwebsite: www.oaoosk.ru

Cover photo: Maxim Vorkunov

48

4 12

4_ TO BUILD, COLLABOrATe, COMPeTe USC objectives in civil shipbuilding

12_ VISIBLe BeNeFITS Prospects for domestic shipbuilding industry based on IMDS 2013 results

16_ THe SHeLF OBLIGeS Yuri K. Shafranik, Chairman of the Union of Oil and Gas Producers of Russia reflects on the problems of Russian shelf development and the challenges to be met by domestic shipbuilding industry in this context in an exclusive interview with United Shipbuilding Corporation’s corporate magazine

24_ BrAZILIAN WAY The Brazilian shipbuilding industry has recovered and is rapidly developing under the control and with the support of the state

28_ “THere IS NO ALTerNATIVe TO THeM IN THe ArCTIC” Director General of FSUE Atomflot Vyacheslav Ruksha — on the economic and strategic benefits of new-generation nuclear-powered icebreakers

34_ THe FIrST STeP INTO THe ArCTIC SHeLF Director General of the joint stock company “PO Sevmash” Mikhail Budnichenko speaks about the construction of a unique ice-resistant offshore platform and shipyard’s basic projects for Arctic exploration.

38_ THe ABYSS OF eNerGY Analysis and the economic outlook of marine renewable energy sources

48_ HerOeS OF eXTreMe DePTHS Domestic hydronautics, an industry engaged in deep water research and exploration using manned submersibles, marks its glorious anniversary

56_ISSUe WATCH

34

PrOJeCT VIeW

STrATeGIC AIM

r. Mironenkov, with your length of employment with USC, you can be considered as a veteran of the Corporation’s top

management. How has civil shipbuild-ing in the country and within the Cor-poration changed over the time of your work at USC?

— The period from 2009 to 2013 can be characterized as the time of a “per-manent storm in the oceans of the

world” of civil shipbuilding. A man-agement team, which came to USC in June 2009 and began its activities with addressing the Far Eastern Shipbuild-ing and Ship Repair Center’s problems, clearly understood that it was impossi-ble to hold the situation, much less cre-ate the prerequisites for development without anti-crisis measures.

— What was the situation you found?

— We remember the year 2009 as the time of a major recession when the global shipbuilding industry had realized that many of the orders placed with most of shipyards had not supported by either freight base or by money of the banks that provided financing of the construction of a new fleet of conventional vessels. We saw how our colleagues in leading shipbuilding powers — South Korea, China and Japan — felt apprehensive

TO BUILD, cOLLaBOraTe, cOMPeTeUSc Vice President Dmitry Mironenkov – on shipbuilding clusters, “sleeping” laws and new approaches to industry development

USC objectives in civil shipbuilding

-М

4 USC №3(16), 2013

about perceiving the situation after the 2008 crisis.

— For them, it was a global cri-sis, that is, they passed their upturn, whereas for us…

— The situation in world shipbuild-ing industry can still be described as an excess of production capacity over the volume of contracts that generated the current order book of leading ship-building corporations.

The situation In Russian shipbuild-ing industry was substantially just the opposite. The 1990s saw a catastrophic decline in output of the shipbuilding in-dustry in Russia. After the planned economy system, in which the shipbuild-ing companies worked in Soviet years, collapsed and many of them failed to adapt to new so-called market economy conditions. And without support of the construction of submarines and surface ships — the core area of their activi-ties — most of enterprises consolidat-ed in USC kept their head above water. Shipyards and design organizations lost their main production personnel who knew how to design and build warships and civil vessels on schedule, to a good quality and at the cost that was calcu-lated at the signing of contracts.

Let’s go back to 2009. The business profile of those plants, which managed to retain their viability after the severe 1990s crisis and a sluggish recovery in the early 2000s, was dominated by state defense order and partly by export con-tracts under military-technical coop-eration. Construction of civil vessels at most USC’s shipyards was sporadic. This

was the legacy of the USSR Ministry of Shipbuilding Industry’s system: the ship-yards were mainly engaged in the con-struction of warships and submarines. As of 2009, USC included virtually no plants specialized in civil production.

In this situation, with support from the Government, we received

civil orders to save shipyards after the next wave of the crisis caused by the 2008 events. These were primarily orders from the budgetary organiza-tions funded within the RF Ministry of Transport’s Federal Target Program; orders from major oil companies (Gazprom, Rosneft, and LUKOIL); ship-ping companies (Sovkomflot, Volga and Moscow shippers).

Within the strategy worked out, our main objective was to specialize some of the existing enterprises in civil produc-tion. In addition, the projects for estab-lishing new production capacities in the Far East (Zvezda Shipbuilding Complex)

and the North-West (Novo-Admiralty Shipyard) were studied.

We clearly understood the need to actually re-create the core competen-cies needed to build civil shipbuilding products, primarily large-capacity ves-sels and marine equipment that were in demand from our major domestic customers — oil and gas companies. As part of meeting this objective, it was necessary to create a competitive environment in order to manufacture products within the time limits speci-fied in the contract terms, to a quality expected by the customer, and within the price, which was formed in civil shipbuilding by sufficiently stringent world market conditions.

— You mentioned Zvezda and Novo-Admiralty Shipyard. How did these projects emerge, what is their future?

In developing the original Zvezda concept, the newly established facilities were intended primarily to satisfy the Shtokman gas condensate field’s need for large-capacity vessels and marine equipment. Novo-Admiralty Shipyard was mainly aimed at meeting the needs of the Yamal LNG Project and build-ing icebreakers for operation on the Northern Sea Route.

In 2009–2011, by the Govern-ment’s instruction, our major custom-ers submitted their long-term fleet construction plans. They gave an idea of the potential volume of orders and confirmed the feasibility of establishing new facilities for the construction of large-capacity ships and marine equip-ment.

«In 2009, the business profile of the plants,

which managed to retain their viability after the severe 1990s crisis and a sluggish recovery in the early 2000s, was dominated by state defense order and partly by export contracts under military-technical cooperation. construction of civil vessels at most USc’s shipyards was sporadic».

“Today, russia’s biggest companies rosneft, Gazprom, and Sovkomflot are forming a substantial long-term portfolio of orders through 2030. This involves orders for vessels that will be needed for the development of offshore fields together with the active use of the Northern Sea Route. According to preliminary estimates, this portfolio is as follows: we may need 512

vessels before 2030 with their total cost of 6.5 trillion rubles (approximately US$195 billion). Our shipbuilders will need to use every effort to compete for these orders and turn them into real contracts. First of all, the United Shipbuilding Corporation must choose its general development strategy and the range of civil vessels in which it will accommodate its experience and effective

groundwork and realize its competitive advantages.I note that the Russian shipbuilding industry has traditionally held a strong position in the ice-class river-sea vessel segment. The domestic products successfully compete with foreign manufacturers in such niches as the production of drilling rigs, exploration vessels, and supply-related vessels. It is recognized by

both customers and foreign competitors.However, it is necessary to expand the product range, develop new types of vessels...We need to adopt foreign experience, set up technology alliances with leading manufacturers.”

Russian President Vladimir Putin.

The meeting on civil shipbuilding prospects

Vladivostok, August 30, 2013

USC №3(16), 2013 5

Later, USC entered the market for offshore equipment for the Caspian oil deposits. The integration of Caspian Energy allowed USC to create a cluster of design and manufacturing capaci-ties in the south of Russia and receive an order from LUKOIL to build an ice-resistant platform for the Filanovsky offshore oil field. These capacities and personnel competencies are necessary and sufficient to carry out the essential part of LUKOIL’s vessel and marine equipment program elaborated for the Caspian region.

In the North, USC completed the fitting-out of the offshore ice-resistant platform Prirazlomnaya ordered by Gazprom and the jack-up drilling rig Arkticheskaya. Thus, both Sevmash and Zvezdochka had met their commit-ments to build civilian facilities made back in the 1990s.

In 2011, to prevent the shutdown of production enterprises and retain personnel that worked at the Baltic Zavod Shipyard and Vyborg Shipyard, we provided these shipyards with civil orders and integrated them into the USC Group of Companies. Currently, both the shipyards actually specialize in civil shipbuilding orders. As is known,

Baltic Shipyard has received an order to build the lead 60-MW nuclear-pow-ered icebreaker and has a good chance to build the next two follow-on ships in this series. In addition, the shipyard has resumed the construction of a float-ing nuclear power-generating unit for Rosenergoatom. The Vyborg Shipyard, within cooperation with Arctech Hel-sinki Shipyard, a joint venture between USC and STX Finland, has established a very efficient cluster to build icebreak-ers and supply vessels.

Thus, we have taken an important step towards establishing competitive in-dustrial clusters in civil shipbuilding on the basis of individual enterprises tailored for civilian production: Zvezda

cluster for operation of joint ventures in the Far East, a cluster in the North-West on the basis of the existing facilities — Baltic Zavod and Vyborg Shipyard in cooperation with a shipyard in Helsinki, and the South cluster oriented to serve Caspian projects.

Today, USC’s order book includes 94 units of civil ships and marine equipment.

At present, USC includes enterprises with the capabilities to build certain types of vessels, which can be produced at the existing facilities — actually the vessels, which we refer to medium-capacity shipbuilding products, with a capability to manufacture offshore plat-forms for a regional market (for exam-ple, for the Caspian region). These are Baltic and Vyborg plants, Arctech Hel-sinki Shipyard, ASPO, Lotos, and Kras-noye Sormovo. The objective of prepar-ing and building large-capacity vessel fleet and large-sized marine facilities is currently met by building new facilities at the Zvezda Shipyard. Unfortunately, the Novo-Admiralty Shipyard project was frozen last year — mainly due to lack of the confirmed plans for the con-struction of large-capacity vessels for the Yamal LNG project.

« Partnership with the world’s

leading shipbuilding corporations is now the single way that will enable us to close the technology gap and gain experience in the construction of a product line such as large-capacity “offshore products».

Multifunctional icebreaking supply vessel Alexei Chirikov

STrATeGIC AIM

6 USC №3(16), 2013

The situation changed in April-May 2013. As a result of instructions given by Deputy Prime Dmitry Rogozin, who is supervising the shipbuilding industry, we have received new forecasts for the con-struction of vessels and marine equip-ment for the period until 2030 from most of domestic potential customers. Now we can state that our existing manufacturing capabilities do not cover the volume of potential orders. In this regard, it is nec-essary to speed up the construction of the Zvezda shipbuilding cluster and reac-tivate the project of building new capaci-ties in the North-West of Russia.

— At the May meeting chaired by the russian President, civil shipbuild-ing was for the first time called the strategic priority of the state’s indus-trial policy in the industry. What is your opinion on the cause of this?

— We all read the newspapers and see the active efforts undertaken by the Russian Government to conclude the license agreements with Gazprom and Rosneft for the development of the shelf of the Arctic and Far Eastern seas. The reserves will be clear after the seismic and exploration work in the fields. However, today our major customers have drawn up long-term plans for con-struction of vessels and marine equip-ment relying on the expected reserves.

Development of these fields in line with the license agreements is to be done in a fairly short period of time. The objective of shipbuilders is to syn-chronize the creation of new facilities, which will be capable of providing the construction of in-demand large-capac-ity vessels and marine equipment.

Another major problem to be ad-dressed when building new production capacities is the formation of personnel teams able to build new equipment in a fiercely competitive environment on the global shipbuilding market.

As of today, we have a clear weighted approach to solving such problems as the transfer of technologies from our colleagues — the world’s leading ship-building companies. Our proposals for cooperation had a response. In particular, in 2010, the Far Eastern Shipbuilding and Ship Repair Center and Korea’s Daewoo Shipbuilding & Marine Engineering Co. Ltd set up a joint venture, whose charter prescribed DSME’s obligations to provide

training of Russian personnel at the main shipyard of the South Korean Corpora-tion. Technologies to be transferred to the joint venture for the efficient con-struction of large-capacity vessels unique to the Russian shipbuilding industry like LNG tankers also were prescribed. Due to lack of a confirmed Shtokman-related order, these programs were frozen, but the work done has formed the basis that can be used to achieve the actual objec-tives set at the May 21, 2013 meeting with the President.

— What is the current situation with technology development of domestic civil shipbuilding? How do you as-sess the objectives and limitations of technology partnerships with foreign companies?

— From the production engineering standpoint, the situation in the Russian shipbuilding industry can be character-

ized as lagging for decades. This is not a purely time interval, it is a time lag that separates us from the beginning of the construction of new types of ves-sels — large-capacity LNG carriers and offshore platforms. These are the objects that our companies have never built on turnkey basis and they lack know-how — the key element for their efficient construction.

The reason for such a basic technol-ogy gap is single — lack of orders. Since there were no orders, no capacities were built for the construction of a large-capacity fleet. No orders mean no expe-rience in the construction of such ves-sels, no feedback during the operation of these vessels required to consider all the comments and errors of the first ves-sels in a series during the construction of the follow-on vessels.

In fact, we are going from scratch to the large-capacity shipbuilding sector.

Ice-class tanker Mikhail Ulyanov

Multipurpose nuclear powered icebreaker 60 MW

USC №3(16), 2013 7

Several options are available to better address this problem.

First of all, we could try to establish the process chain ourselves on the prin-ciple of self-sufficiency. But we suppose that the customers will not give us the opportunity to experiment and learn at their expense, moreover to learn long enough and with an unguaranteed result. Of course, they support USC’s desire to provide the possibility of build-ing ships on turnkey basis in Russia, but with a clear requirement for a techno-logical and investment partner whose experience will ensure the execution of orders with efficient schedule, quality and cost management.

Partnership with the world’s leading shipbuilding corporations is now the single way that will enable us to close the technology gap and gain experience in the construction of a product line such as large-capacity LNG carriers and “off-shore products.”

The objective of getting construc-tion technologies for icebreaking sup-ply vessels has already been reasonably attained by setting up the joint venture Archtech Helsinki Shipyard for the construction of new support vessels and icebreakers. I hope that the ground-work laid in Soviet times will allow us to independently implement the design and construction of nuclear-pow-

ered icebreakers and nuclear facilities at the Baltic Shipyard. As for the construc-tion of such a product range as river-sea vessels, there is Krasnoye Sormovo Plant that is sufficiently technology-sav-vy and competitive in terms of timing, price, and quality.

Let’s sum up. The large-capacity and offshore shipbuilding objectives can be achieved primarily through partnership with leading corporations. It is necessary to establish offset partnership: technol-ogy offset — in terms of technology transfer, personnel training, transfer of project documentation whose extent is necessary and sufficient for ship con-struction on turnkey basis at new facili-ties in Russia, particularly at the Zvezda shipbuilding complex; investment off-set — with the participation of our part-ners as co-investors in the construction of facilities and operational activities of the joint ventures.

— What was the principle USC man-agement used to choose technology partners?

— We selected the partners in those sectors that improve the USC compe-tencies, partners which are leaders in their product segments.

As to tankers carrying liquefied natu-ral gas, so called membrane tank LNG carriers, DSME is the leading shipbuild-

ing corporation here. As regards explora-tion platforms, Yantai-Raffles was one of the world’s leaders at the time of setting up the joint venture. A company in Hel-sinki was the best builder of supply ships and icebreakers and the JV Archtech Hel-sinki Shipyard was established around it. As you see, geography is wide.

— Major oil and gas companies are starting to be involved in shipbuilding project management. Until now, USC was responsible for this area. What do you think are the benefits and risks of new approaches to industry develop-ment?

— Under RF President’s Decree on setting up the United Shipbuilding Cor-poration, those assets, plants and design organization were transferred to it, in which the state owned either a major-ity or a minority stake. Of course, at the time of its formation, USC assets were “patchy”, but today there is already the backbone of the production facilities engaged with civil shipbuilding from the standpoint of enterprises’ activities seg-mentation.

I admit that the our customers’ plans submitted to the Government exceed not only the capacity of existing facili-ties, but also the capabilities that will available when new shipbuilding facili-ties are commissioned.

Jackets of the LSP-1 offshore ice-resistant fixed platform at the Filanovsky field

STrATeGIC AIM

8 USC №3(16), 2013

This is not the first time in world practice when oil companies enter the related sectors to get independence in the area of critical supplies during off-shore field development. First of all, this involves the creation of EPC com-panies that have the competencies to provide integrated management of the projects related to offshore field devel-opment and facility construction and also own shipbuilding capacities.

Offshore production platforms are the most capital-intensive installa-tions. These are unique structures, for which there no serial or standard solu-tions; they are designed for specific fields with regard to their geological, climatic and other factors. This is not series shipbuilding to a greater degree, but “offshore” production targeted at the development of marine equipment, production platforms of unique sizes tailored to each specific customer.

The capacities of the enterprises in-tegrated into USC make it possible to build part of the product range that our customers need — primarily supply and seismic survey vessels, standard semi-submersible and jack-up drilling rigs.

— Over the years, USC in alliance with the Ministry of Industry and Trade, which lobbied the introduction of the so-called “quotas under the keel,” have been repeatedly accused by the fishermen in industry selfish-ness and attempts to solve the prob-lems of one industry at the expense of the other. In addition, allegations were regularly heard that russia has neither its own projects nor facilities

to build a competitive fishing fleet. What is your opinion on these issues?

— Instructed by the Government, USC undertook a set of measures required to enter a rather specific fishing vessel construction sector. As is known, in Soviet years, most of these vessels were built outside the USSR — either in the socialist countries or at shipyards in Spain and other for-eign countries.

We are sure that a system of incen-tives, so-called “quotas under the keel” or something similar is needed to cre-ate the conditions for building vessels at domestic shipyards. In order for the mechanism to work, the measures depending on USC have been elabo-rated in detail.

First, we have determined the ship-yards capable of building different types of fishing vessels within the time limits that meet customer requirements and at prices dictated by the situation on the international market.

Second, we have performed a de-tailed analysis of the projects that may be in demand from our customers. We have a clear understanding of how it is possible develop and implement a pro-ject in line with an RFP by attracting subcontractors, including leading inter-national companies that specialize in the design of this type of vessels.

Third, we have worked out an optimal financial mechanism, which has already been effectively implemented in the con-struction of vessels for inland waterways. This is a preferential lease mechanism. It extends also to the construction of fish-ing vessels. Such a mechanism makes it possible to finance the construction and

operation of vessels for those customers that do not have sufficient own funds to build a new fleet — unfortunately, most customers in Russia are among them. As a result of elaborating the issue with our partners — leasing companies — we have come to the single constructive conclu-sion: “quotas under the keel”, which serve as a money-back guarantee for the leas-ing companies under vessel construction contracts, are one of the key conditions for efficiently launching the preferential fishing vessel lease program.

The Government repeatedly raised this issue together with the require-ments for making the necessary chang-es to the existing federal law on fisher-ies. However, unfortunately, the amend-ments have not reached repeatedly the relevant authorities, and the issue has not yet been resolved.

Analysis of world experience sug-gests that such a “quotas under the keel” system works quite effectively. For example, in Canada, about 80% of the quotas are allocated under the keel of fishing vessels under construction in the country. Such a system has not been introduced at once. In the 1980s, the Canadian Government found that the old quota allocation system forced the shipbuilding companies specializ-ing in the construction of such vessels to close down and was simultane-ously accompanied by takeovers of small Canadian fishing companies by larger American neighbors. To pro-tect the interests of domestic enter-prises — and in fact from food security considerations — Canada legalized the new mechanism despite the limitations associated with its membership in the WTO. It still works efficiently enabling small Canadian fishing companies to survive in the market, while ship-yards — to continue its activities in the field of construction of fishing vessels.

— What is, in your opinion, the main problem of civil shipbuilding in rus-sia?

— Given USC’s impressive order book, it can be argued that the produc-tion personnel are the key critical re-source today.

In 2009, we formulated a fairly clear algorithm for solving problems of train-ing new design engineers. A system of training such specialists on the basis of

« Now we can state that our existing

manufacturing capabilities do not cover the volume of potential orders. In this regard, it is necessary to speed up the construction of the Zvezda shipbuilding cluster and reactivate the project of building new capacities in the North-West of russia».

LSP-1 model

USC №3(16), 2013 9

our leading universities was launched and we can now state with confidence that the deficit of engineering specialists will be overcome in the next 3 to 5 years. Young people have come to us, because they believed that the shipbuilding in-dustry would give them an adequate in-come in addition to interesting work. We see that the youth in the Far East, in St. Petersburg and Severodvinsk actively learns and begins to work at our plants and design bureaus.

The main problem today is to attract new personnel to production sites, because there is a shortage of produc-tion workers like welders, ship fitters, marine equipment installers. This is the lack of people in traditionally shipbuild-ing occupations requiring high quali-fications that can be achieved through trade training in vocational institutions.

Moreover, today we have a very alarming generation gap: the personnel who remained in the shipbuilding in-dustry despite the crisis of the 1990s are aging, while the influx of young people has been negligible. I think this gap is fraught with a situation when man-hours may not be simply enough to fulfill the current USC’s orders on schedule.

Potentially, this problem will emerge full blown in case of the large-scale construction of vessels and marine equipment for offshore fields. With a shortage of personnel, quite a serious conflict between the various activities of the Corporation is also probable during

the implementation of military and civil orders.

The only way to solve the problem of shortage of production workers is to re-establish the state-level vocational education system. Funds have been al-located for these purposes in the state shipbuilding program and I hope the Government will be able to recover the system for vocational training of work-ers. On our part, we certainly must give a signal to young people that the ship-building professions are no less pres-

tigious than working in other sectors of the economy and are adequately paid.

— Are there many examples when the civil and military production sec-tors successfully co-exist amid a shortage of workers?

— This problem has been partially solved through the specialization of en-terprises in military or civil shipbuild-ing. As part of personnel recruitment for shipyards engaged in civil shipbuild-ing, there should be programs separate and independent of military shipbuild-ing. With similar technological aspects,

the issues of building a ship and a com-mercial vessel have a lot of nuances that, for example, do not allow the use of the production personnel that build submarines in the construction of off-shore facilities and civil vessels. The technological processes are similar, but the types of construction project man-agement are totally different. And it is these nuances that eventually determine whether the enterprise can effectively execute an order for the construction of offshore equipment. Such competence of personnel teams is created through specialization in a certain type of prod-uct. For example, Krasnoye Sormovo became an effective shipyard building the series of “river-sea” transports. However, it is unlikely competitive in the construction of offshore platforms, both due to technological limitations and because its personnel lack the nec-essary experience.

— But historically, this shipyard was largely oriented to naval ship-building.

— Yes, Krasnoye Sormovo is one of the most successful examples of the conversion of a naval shipbuilding plant into an efficient shipyard building civil vessels.

— Nearly two years have passed since the law on support of shipping and shipbuilding — a package of laws and amendments — was adopted. USC

« Production personnel are the key critical

resource of civil shipbuilding  in russia today».

Project rST27 vessel

STrATeGIC AIM

10 USC №3(16), 2013

was involved in its development. Why hasn’t it started working? Why is there no a particular “shipbuilding” eco-nomic zone?

— Any law is a compromise of inter-ests of many parties — the state from the standpoint of obtaining the taxation base, consumers of shipbuilding prod-ucts and the shipyards themselves. This law is intended to support not only the shipbuilding industry, but also shipping. As part of its development, a compro-mise was chosen to solve the problems associated with support of the ship-building industry. Amendments were made to existing Federal Law 116 on special economic zones permitting the specialized shipbuilding clusters to be established more efficiently compared with the economic zones.

However, in my opinion, there is a contradiction in the law on special eco-nomic zones itself. Its essence is as fol-lows: a regional administration is the ini-tiator of establishing a special economic zone for shipbuilding and it is automati-cally deprived of a share of the taxation base in the form of local taxes when such an economic zone is set up. This is the reason why most administrations in the regions, where our existing shipbuild-ing facilities are located, are passive. At the moment, only the Administration of the Astrakhan Region, where Governor Alexander Zhilkin personally supports the project, has applied to the Russian Ministry of Economic Development to set up a “shipbuilding” economic zone. In addition, we are expecting the Ad-ministration of the Khabarovsk Krai will demonstrate similar intentions.

However, the primary objective of Federal Law 305 is to provide an at-

tractive investment environment for establishing new production capacity, and I think that the Administration of the Primorsky Krai (Far Eastern Federal District) will not oppose the introduc-tion of a “shipbuilding” economic zone regime where new civil shipbuilding has not been practically implemented. That is, this law is quite viable for such projects as the Zvezda shipbuilding cluster.

— What do you consider an impor-tant achievement made at USC?

— If you sum up the performance of the management team that came to the Corporation since 2009, the objectives set then have been mostly achieved.

USC has overcome the anti-crisis period and the basis for its normal de-velopment has been laid.

A big diversified order book has been formed that made it possible to carry out the specialization of enterprises. Of course, the type of orders, for construc-tion of which the Corporation has no

capacity, cannot be included into it. That is why approximately 40 ships are being built abroad — for example, VLCC tankers (oil tankers for transportation of oil and oil products of 300,000 DWT and over), which really cannot be built at the existing domestic facilities. Of course, some ships ordered abroad have evaded the tendering procedures. Some private shipping companies prefer to build ships at prices below the cost of even Turkish and Chinese shipyards. Competition is competition.

I suggest that the existing order book enables most of USC enterprises specializing in civil shipbuilding to elaborate medium- and long-term plans for their production facilities and shape their personnel policy. It is vital to any shipyard as shipbuilding is production featuring a “long cycle of the implementation of the shaped strategic plans.”

As the dynamics of the USC shipbuilding shows (see the graph), the joint efforts by the Government and the Corporation have significantly increased the USC Group’s portfolio of orders in the civil shipbuilding sector over the recent years. However, such as a substantial growth in the consolidated volume of orders is not just a victory, which one can safely rest on, it is also a challenge. The once-attained peak has already become a new reference base and a new consolidation of the Government, customers and, of course, our shipbuilders’ will and efforts will be needed to maintain the growth dynamics in the face of unfavorable global markets situation.

Interviewed by Alexey Kravchenko

research expedition vessel Akademik Tryoshnikov

DYNAMICS OF USC CIVIL SHIPBUILDING, billions of rubles

2010 2011 2012 2013 (target)

7,6

142,9174,4

240,1

335,9

060,9

39,2 47,7

110,2

66,8

135,3163,6

48,6

14,488,550

100

150

200

250

300

350Work in progress

New contracts

Delivered contracts

Growth in order book

USC №3(16), 2013 11

NOTeS FrOM THe eXHIBITION

I. G. Zakharov,Vice-President of USC, Doctor of Engineering, Professor

he 2013 International Maritime Defense Show has ended in St. Petersburg. One cannot but admit that the quality of displays presented at IMDS has mark-edly improved over the twelve years

since its first edition. This year’s show became the most spectacular event and featured a high level of business activity. United Shipbuilding Corpora-tion’s stand turned out to be largest and most rep-resentative at IMDS.

USC has come with good export results to the current exhibition. A Project 971I nuclear-powered submarine, an upgraded 877EKM diesel-electric submarine, and two Project 11356M frigates were handed over to India. Upgrade work on the aircraft carrier INS Vikramaditya was completed. In addition, Vietnam took delivery of two final CMDB Almaz-developed Project 10412 Svetlyak-class patrol boats, while another two warships, Project 1234E small missile ship and Project 1159T escort ship, were upgraded for Algeria.

457 companies from 31 countries, including 89 foreign exhibitors, presented their stands.

VISIBLe BeNeFITSProspects for domestic shipbuilding industry based on IMDS 2013 results

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12 USC №3(16), 2013

IMDS 2013 occupied 17,000 square meters of in-door exhibition space, outdoor exhibition areas, Marine Station’s berths and the waters adjacent to the exhibition complex. The international forum attracted all the leading enterprises of Russia’s maritime industry. Their products could be seen on the stands, on the berths, as well as in outdoor areas and at the test range. Five research/practice conference and 31 congress/business/ceremonial events were held as part of the show, among them four roundtables arranged and held by the United Shipbuilding Corporation. Interestingly, the Royal

Netherlands Navy attack submarine Dolphin and frigate Evertsen as well as the Polish Navy ship Arctowski took up the Marine Station’s berths next to the Russian ships

The trends in combatant ships and advanced development efforts from USC’s design bureaus became the most interesting part of the forum for experts and analysts.

One of distinctive trends in modern warships is their capability to interoperate with other services of the armed forces of the home country and the allied countries, use precision guided weapons and robotic systems on a massive scale, employ state-of-the-art information systems, and have a low signature and staying power.

Analysis of the world naval ship strength sug-gests that it will significantly shrink in the future. However, a reduction in ship strength will not affect the combat capabilities of the fleets, which will be provided with improved infrastructure, while the ships themselves will increasingly feature high technologies. In military terms, the empha-

Future reduction in world naval ship strength will not affect the combat capabilities of the fleets, which will be provided with an improved infrastructure, while the ships themselves will increasingly feature high technologies.

USC №3(16), 2013 13

sis will gradually shift from a build-up of striking power towards wider use of the command, control and targeting data systems in order to increase the probability of weapon success.

A lot of interesting ideas were voiced and the latest developments were first presented to the public at the exhibition. Let us dwell on some of them.

Non-nuclear submarines are one of the most fast-growing classes of modern warships. Project 1650 and 950 Amur-class submarines, equipped with a missile system capable of striking both sea and shore targets from a submerged position, caught the attention of visitors as before. This capability distinguishes Rubin CDB ME’s subma-rines from proposals made by the developers from other countries. Moreover, despite a significant novelty of the project, the lead ship — a prototype of these submarines — has been successfully built and handed over to the Russian Navy. Amur-class submarines offer a low acoustic signature and a high level of automation allowing a reduced crew size.

In general, the future for non-nuclear sub-marines is associated with the introduction of advanced technologies like air-independent pro-pulsion (AIP) systems and web-based information systems that enable a new performance level in the development of these ships with emphasis on external markets.

Experience of local conflicts that occurred in the last decades has prompted not only changes in

the methods and techniques of waging war at sea, but also a new force organization system that led to the emergence of a class of general-purpose am-phibious assault ships, which were represented at the show by a Vladivostok-class landing helicopter dock (LHD). In the course of the show, the Baltic Shipyard completed construction of the afterbody of the ship, which was accepted by the customer and shipped to France (by the way, the French side noted Russian shipbuilders’ good workmanship). Immediately after signing the acceptance certifi-cate for the afterbody of the first LHD, the Baltic Shipyard has laid down the hull of the second LHD Sevastopol.

An important feature of modern surface ship-building is the refusal to build specialized ships of the main classes and the change-over to the con-struction of general-purpose ships only capable of performing the full range of tasks inherent to surface combatants. Project 22356 and 11356 mul-ti-mission frigates presented at IMDS 2013 by the Severnoye Design Bureau became a dramatic confirmation of this trend (Project 11356 ships are being built in series at the Yantar Shipyard for the Black Sea Fleet).

Priority in the current fleet development pro-grams of many maritime states is given to frigates, which has significantly modified the concept of these ships. Today, frigates are a powerful fighting force capable of solving a wide range of missions both in the sea and partly in the ocean zones. Modern frigates are characterized by the use of the newest naval weapons and armaments, as well as modern situational awareness, targeting and automated control systems.

The most distinctive feature of modern frigates compared to larger ships is their relatively large construction series and reasonable price. There-fore, it is expected that this class of ships will re-main one of most numerous in the near future.

corvette Boiky (Project 20382) was a highlight of the show. commissioned by the russian Navy shortly before the show, it became one of the best-in-class warships.

NOTeS FrOM THe eXHIBITION

14 USC №3(16), 2013

I’d like to dwell especially on warships of lim-ited displacement which include corvettes. This class emerges either in small maritime countries, where such ships are the largest surface combat-ants capable of staying at sea for considerable time, or in the navies of other countries that need much more ships than the senior classes of ships can provide.

In both cases, the question is a low-cost ship. Project 20382 multi-purpose corvette (develop-er — Almaz CMDB) became the most up-to-date representative of this class. Ships of this type are being built in series at the Severnaya Shipyard and the Amur Shipbuilding Plant. One of them, the corvette Boiky, was a highlight of the show. Com-missioned by the Russian Navy prior to the show, it became one of the best-in-class warships. The

construction of an upgraded version of this cor-vette is nearing completion.

At USC stand, the visitors could also see midget submarines from the Malakhit SPMBM Design Bureau, aircraft carrier projects from the Nevs-koye Design Bureau, high-speed patrol boats and hovercraft from the Almaz CMDB, corvettes and small missile/gun ships from the Zelenodolsk Design Bureau. All of these remarkable technical achievements of our developers were definitely the highlight of the show that has ended recently. There is only one wish to the organizers: the ship mockups at the next show — IMDS 2015 — should be arranged and accompanied by the necessary explanations so that the names of their origina-tors — worldwide known developers — were clearly visible to visitors. After all, the show is primarily focused to attract would-be foreign cus-tomers and it is vital to the latter to know who has developed one or another project which is of inter-est to them.

The range of ships presented at IMDS 2013 is undoubtedly wide, but our designers do not stand still. The formation of the State Armament Program 2016–2025 commenced six months ago. Defining the concept of future ships, whose proposals are being prepared by design bureaus, should be the priority task in the elaboration of its shipbuilding section. These ships will be fundamentally different from existing projects in a higher level of informa-tion support, accommodation of precision guided weapons on board, a higher degree of automation and a reduced crew size. Robotic devices and mod-ular design approaches will find wide use.

Thus, work on supplementing the Russian Na-vy’s ship strength is gaining the necessary momen-tum and in 2015, when the next IMDS will be held, its participants and visitors will be able to see and appreciate more advanced ship projects, weapons and military equipment.

amur-class submarines offer a low acoustic signature and a high level of automation allowing a reduced crew size.

USC №3(16), 2013 15

OIL & GAS PrOJeCTS

THe SHeLF OBLIGeSYuri K. Shafranik, one of the foremost domestic authorities in oil and gas industry, chairman of the Union of Oil and Gas Producers of russia, Head of the russian chamber of commerce’s committee on energy Strategy and Fuel & energy Sector Development, reflects on the problems of russian shelf development and the challenges to be met by domestic shipbuilding industry in this context in an exclusive interview with United Shipbuilding corporation’s corporate magazine.

he oil and gas sector of the economy is the main con-tributor to russia’s budg-et. Moreover, in 2008 the export of oil literally saved

the country from economic collapse. And now we are eager to produce hy-drocarbons on the Arctic and Far east-ern shelf, while more than 80 percent of undiscovered deposits are account-ed for by land. How much is advisable to go to the shelf? Maybe it’s better to leave it alone and just increase the oil recovery factor (OrF) in order to keep on producing about 500 million tons of this raw material a year?

— You cannot oppose one another. And the point is not just the ORF. Ex-ploration and development of any oil and gas provinces require a systematic approach, a precise determination — what project and when you need to take up, what objectives need to be set and

for whom, what conditions need to be created to attract investors and project contractors. Moreover, the energy policy, including taxation, should accommodate the full range of geographic and eco-nomic differences observed from Kalin-ingrad to Anadyr. By the way, there are no two shelves alike: the Arctic environ-ment differs strikingly from the Caspian, Azov or Black Seas…

Yes, the oil industry has saved the country when the economic crisis struck. And everyone should always remember this. But it is more important to all of us to understand and have a firm grasp of how this industry was cre-ated, what successes the oilfield workers achieved in an incredibly short time by overcoming any difficulties. It is impor-tant to remember this in order not to be afraid of serious work today…

Back in the early 1970s, my oil ex-ecutives confidently showed dense taiga

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16 USC №3(16), 2013

regions around the village of Langepas on the map: “By the next winter, ten drilling sites will be here, and twenty — there…” Then, such plans seemed unthinkable to me, a young specialist. However, all the scheduled sites really quickly emerged, failure to meet the schedules was always insignificant and caused by force majeure. Moreover, machinery and equipment — except for large gas compressors — were then exclusively domestically made. Even now, in my home town of Langepas, the share of operating import equipment does not exceed 10 percent. Everything else is Soviet-made equipment that still works reliably (of course, after some modifications).

The results depend on goal-setting. In the 1930s, domestic industry was created by people who, in fact, were just torn from the plow. They had to quickly learn specific skills from our own

and foreign experts, because specific tasks were set — to build a car, a plane, a ship or a blast furnace …And every task was described in detail specifying who performs it and how, in what time frame, what we buy abroad and what we make ourselves, etc. It was then (in the 1930s and 1940s) that the creative chain “Idea — Research Institute — Design Bureau — Pilot Production — Embodi-ment of the Idea” emerged. And then the construction of a plant began for mass production of those products in which there was a need.

Of course, the scales are different now than they were before, because, after all, we are now equipped with new knowledge, techniques and technolo-gies. However, as regards goal-setting, not everything is in order in our country unlike those times. Many may fairly note that in the industrialization period the goals were often achieved by improper

means. OK, let’s now fully apply proper means — market means creating a com-petitive environment. By the way, the Trans-Siberian Railway — the longest railway in the world — was built in tsa-rist Russia times in a record short time without the use of forced labor.

For many years I have not got tired of repeating that the main tasks for the oil and gas industry are to increase the efficiency of subsoil use by extrac-tive industry companies and improve the operating performance of the companies themselves several times. It is necessary to give accurate performance evaluations and accordingly modify the economic policy on their basis. If we don’t do this, we’ll continue to parasite on the produc-tive capacity laid before the birth of the Russian Federation and so the industrial property handed out in the 1990s will wear down to the last hole instead of its development and growth. Of course,

«The shelf, especially the arctic shelf, is

the area of state interests and the area of state responsibility, both political and economic — responsibility for the environment, for the inviolability of borders» .

USC №3(16), 2013 17

this is profitable to a small circle of per-sons preferring to invest only in their own welfare, but is detrimental to the country.

I recall that the global stock market on the eve of the 2008 crisis was esti-mated at US$ 60 trillion, and our market made up more than US$ 2 trillion of the amount. Then, the global stock market fell 1.8 times, the Russian one — more than three times, while the capitaliza-tion, for example, of Gazprom dropped more than five times at all. It is impossi-ble not to think about this — though in-direct but real and tough — assessment of the level of management efficiency of our companies. A lot of efforts and resources are not needed to change the situation, it is necessary only to show greater political will and pose stricter requirements for performance of com-panies’ management.

Now we’re already ten rather than five years away from developing the hydrocarbon deposits of the “East-ern Vector.” The Eastern Siberia-Pacific Ocean (ESPO) oil pipeline has been laid and the State has built a fairly exten-sive infrastructure along it, whereas oil reserves needed to fill the pipe were in-sufficient earlier and have not been added so far. One can talk about mere cake crumbs. Also, gas reserves have not been added and new deposits have not been developed there. The Vankor deposit saves the situation, although geographically it in no way gravitates toward the “Eastern Vector” and feeds oil to the ESPO along a “knee” route through the Tyumen land. Only Sur-gutneftegaz, Irkutsk Oil Company and Dulisma operate along the ESPO. As regards the latter, Sberbank should be thanked: it has pulled the company out of a difficult financial situation and en-sured the normal operation in the field. Nevertheless, there is still a great deal to do in terms of hydrocarbon pantry development.

— What is the reason for lagging behind over many years? It is very im-portant to understand because the problems in the Arctic would be far greater.

— First of all, this is due to insuf-ficient drilling activities. Moreover, no necessary increase is expected both this and next year. Commercial crude

oil production has been carried out in Russia for 143 years and always the mat-ter “got stuck on well.” Oil comes only from the end of the bit. And today even our exploration efforts are insignificant: 2 to 3 wells in the exploration area. In general, the amount of exploratory drilling had declined from almost 2 mil-lion linear drilling meters in 2001 to 1,170,000 meters in 2011. To provide enhanced growth of oil reserves, we need to increase the amount of drilling 2.5–3 times.

— What is to be done?— We have to work properly — im-

prove the performance efficiency of companies and seek to achieve a high ORF. There is no need to refer to a de-terioration of the resource base, which shrinks in all producing regions of the world. Note: this deterioration causes some to lose their previous positions and helps others to gain position and expand their presence in the global oil and gas market. Texas, second oldest oil region of the world after Pennsylvania, is a good example. Over the last 5 to

6 years, without discovering giant fields like our Samotlor, Texas has almost doubled its oil production. Owing to thousands of small oil fields and small companies, oil production there has grown from 50 million to 100 million tons. Moreover, the cost of gas for indus-trial enterprises in the same period has “dropped” from US$ 212 to US$ 90 per thousand cubic meters. Imagine what a strong economic momentum Texas has got in just a few years! And what, is it a wonder? Of course, it’s not. This is a natural result of targeted, coordinated efforts undertaken by the federal and regional authorities, taking into account global trends that are already obvious or predicted only… A high efficiency makes the production of 100 liters of oil per day profitable here, whereas in our conditions even 5 tons do not fit into the profit limits.

— You see, this means that we must put things right on land rather than strive for the shelf?

— All the above does not cancel the Arctic. It also requires the consistent

OIL & GAS PrOJeCTS

18 USC №3(16), 2013

steps in development but different from what we do, for example, with respect to the Shtokman gas and condensate field, one of the world’s largest deposits. Its development plans were ready 10 years ago, and now they say that the work at it will not start before 2019.

Apart from the “hung” Stockman project, we have good experience with the Sakhalin-1 and Sakhalin-2 pro-jects, which were initially created in more complex water and ice conditions than in the Barents Sea. Launched in the 1990s, these projects are still in suc-cessful operation. But we need to refine: they were initiated by the State, which created all conditions for companies to operate actively. Of course, there were problems along the way (they are typical

of all large projects), but the State also solved them. No one can foresee every-thing in detail for the years ahead and describe everything in the documents perfectly and forever, while the projects must be launched without swinging. If conflicts arise between the sides, it is necessary to sit down at the negotiat-ing table. It is obvious that the State has received, is receiving and will receive a lot from the Sakhalin projects. And most importantly, the island has been given a new breath of life and the people living there have received an incentive and the means of livelihood. If the “fine-tuning” process takes years, the result would be similar to the Shtokman case.

By the way, all that happened also because of the weakness of our analyti-cal services destined to keep track of the priority trends in global oil and gas in-dustry and recommend the most prom-ising projects for implementation. For example, we have missed the shale gas revolution in the U. S., although it did not occur in one day and its preparations took several years.

But believe me: there is no particu-lar trouble that the Stockman project

failed to start. We have other gas and gas-condensate deposits in abundance. Moreover, in projects of such a scale one cannot rely solely on the volume of hydrocarbons. It is important to use domestic productive capacity to maxi-mum and ensure the adaptation of ad-vanced foreign technologies. It should be clearly determine what companies manufacture the appropriate equipment and when, arrange the order of their advancing.

The implementation of offshore projects involves, first of all, the de-velopment and improvement of the technological capabilities required for offshore and underwater production. This will require radical modernization of many companies in the North-West

and Russia as a whole. And the ini-tial idea to liquefy the gas and ship it to America was, frankly, too small, it did not take into account the market de-velopment, although in the oil and gas matters we have to look forward to a quarter-century. If the Stockman field is considered as just another hydrocarbon reservoir, then we will certainly pour the funds found to develop it into the economy of the West by purchasing equipment and technology there. In this case, where will we supply gas? To the West again. And will settle the loans for another twenty years.

What will Russia get eventually? Mythical experience in developing hard-to-reach nature storerooms? To gain real experience, it is better and easier to send our specialists for a few months to intern at foreign terminals and platforms.

— What conclusions can be drawn from experience available to us and other countries?

— The shelf, especially the Arctic shelf, is the area of state interests and the area of state responsibility, both politi-cal and economic — responsibility for the environment, for the inviolability of borders. And who will be responsible for accidents that are more dangerous there than on land? What company will cope with a serious accident at sea? BP would not have coped with the disaster in the Gulf of Mexico alone! Only the state can. Of course, using companies, Ministry of Emergencies, mobilizing profession-als and attracting volunteers, but — the state.

It defines a control system and stand-ardizes the operational environment for companies. Meanwhile, with all the state interest, one cannot rely on the success achieved using public money. It is much more important to ensure the favorable project implementation conditions, loading of Russian industrial enterprises, minimum investment of public funds along with the maximum direct investments of non-state entities. Here it is possible to attract large inter-national companies, international finan-cial institutions (from pension funds to investment funds), because the com-panies use not only their own money.

By the example of the Sakhalin pro-jects, one can argue about whether it is worth trusting a whole shelf to one

«The main tasks for the oil and gas industry are to increase the efficiency of subsoil use by extractive industry

companies and improve the operating performance of the companies themselves several folds. It is necessary to give accurate performance evaluations and accordingly modify the economic policy on their basis».

USC №3(16), 2013 19

state-owned company, but in any case it would be right to specify the license development blocks for it and identify worthy companies for all the key posi-tions on a tender basis. This will allow Russia to stake out several offshore sec-tors as outposts. Literally, 3–5 key sec-tors verified in every sense (to left — in the North West, to the right — in the East, close to Chukotka, and 1–2 sectors closer to the Pole).

But it is important to act systemically at these outposts, too, by increasing in-dustrial production of own platforms and developing domestic shipbuild-ing industry in parallel, and take the condition that at least 70 percent of equipment should be locally manufac-tured. The personnel for this, although not many, still exist — veterans and young professionals who came into the profession by calling.

— In your opinion, what form of management for such projects is most effective in the russian context?

State-owned companies operating offshore have to go to multilateral con-sortia, to a format that prevents possible abuse, makes it possible to work actively with partners and efficiently cooperate with investors. As is known, the easiest way is to steal alone. When working in tandem, it is always possible to agree between each other. But when work-ing in a consortium comprising three members, it will be difficult to agree and steal. And Western partners will feel more comfortable, because they appreci-ate this format and know how to operate within it.

As is known, the Dutch were the first to create public companies, because every merchant was afraid to take risks with investing in one ship. They gathered together and built 10 ships. The ships went into the sea, some came back with the goods, and the others were drowned or robbed by pirates. Nevertheless, the consortium always won.

A similar story is with the shelf. And there is nothing fearful in today’s off-shore development projects! Their main feature is a giant scale, the enormity of the tasks, costs and associated problems. And most importantly, when you are a member of a consortium, you will al-ways know that under the terms of the contract you have to use Russian equip-

ment — for example, place an order for a platform with Russian plants. And if a plant is not yet capable of doing this, then you will solve the task in general, including the subtask of solving the plant’s problems with the plant manage-ment. I repeat once again, there is noth-ing fearful with that. It is important that the conditions are created so that the plant starts to operate.

It is critical to find partners because the partners bring technologies. From the investor’s standpoint, money can al-ways be found for a good project (given worthy terms). For example, the Alge-rian state company Sonatrach works fine — it produces, processes, and transports oil and gas. It ranks 14th among the oil companies in the world. It pays great attention to gas liquefaction technolo-gies and became the third company in the world in LNG transportation. Are we worse than Algeria?

— Why do we have so few consor-tia in the country?

There is a quite reasonable answer to the question: one of the key fac-tors in the consortium format is as few kickbacks as possible. Yes, corruption is Russia’s disaster, but I cannot agree with the fact that the Russian people are a priori corrupt. The vast majority of the Russians are strong opponents of bribery and, more specifically, government cor-ruption.

— Who should lead the shelf activi-ties and at what level?

Since the shelf development is a national task, the coordinator should be a person of State, who will lead the program as a representative of Russia’s legitimate interests. As to the level and structure, these are the organizational is-sues. It is possible to set up a ministry and appoint the minister or a deputy prime minister a responsible person…

— Do you think are there Western partners willing to take on the potential risks of long-term offshore projects and actually promote the growth of our industry?

If the State creates favorable condi-tions, such companies will be certainly found! As you know, I run a company carrying out oil and gas projects in near-ly a dozen countries around the world. And wherever I came to, whoever I met, we always discussed a specific project and the specific environment in which we will have to work. It is paramount, and only then such factors as, for exam-ple, the well-known events in Libya, are taken into account. Therefore, if the con-ditions are in place, the Western part-ners will come. Rosneft that signs one agreement after another and experiences no problems with attracting partners is a good example. It is critical to maintain the state vector, state governance con-trol.

In the indigenous Khanty settlement of Agan, 1986

OIL & GAS PrOJeCTS

20 USC №3(16), 2013

— After how many years can we ex-pect returns on the shelf?

We need not wait for anything. A big payoff is already in the starting need for a huge number of high-tech jobs (which, by the way, correlates to the President’s task to bring them up to 25 million). In addition, we will obtain the effect of the accelerated recovery of the Russian industry. In addition, shelf development will increase our research capabilities, especially in the field of geography, geology, and oceanography, and provide the academic institutions with specific, guaranteed orders rather than projects destined to replenish the archive shelves.

The same can be applied also to the task set by Vladimir Putin in May for the United Shipbuilding Corporation. It is in establishing closer cooperation between shipbuilders, Gazprom, Ros-neft and other companies whose activi-ties are somehow related to operation of marine equipment — in particular, equipment for hydrocarbon explora-tion and production on the shelf. But here we need to understand that the main goal of the next 15–20 years is large-scale development of the whole offshore production facilities and not getting tons of oil or cubic meters of gas.

Therefore, customers (beginning from the government customers) — all companies of any form of activity and ownership, interested in specific offshore projects, in the relevant tech-nologies and equipment — have to start first. It is important to clearly define the main objectives for all par-ticipants of the “Big Arctic Game” to-day and not in 15–20 years, so that to determine the contours of the unprec-edented mega project as soon as pos-sible. And relying on these contours, it is necessary to choose contractors, organize consortia with the manda-tory participation of foreign partners and sources of funding without delay. As a result, for example, shipbuilders or machine-builders will not have to wait in vain for  investment and will start work on the orders as soon as possible. And then, already in the near term, the future tons and cubic meters of hydrocarbons will turn into an in-dustrial and economic boom, which, by the way, will save us in the foreseeable

future also from having to purchase foreign equipment and technology for the oil and gas industry.

What else do you think should be taken into account when launching large-scale offshore projects?

The shelf development program can not be implemented without the bases, without reference (support) points on the coast. We have Salehard, Norilsk, Dudinka, Dixon — it is necessary to start developing the coast around them and work on the shelf in parallel. We need to develop the infrastructure in these cit-ies, because flights to the platform will be made from them rather than from Moscow.

There is another important point in the sequence of offshore development efforts — exploration. Exploration along the Arctic coast in the belt of 200–

300 km. It is necessary to think about it today. You cannot just put out to sea — there is ice. So, as I said, we need to define reference points in order to stake the whole “areal” of deposits and con-duct exploration along the coast. Today a target and urgent exploration program is critical more than ever and it must begin from the coastal points.

In this context, I would like to recall one strategic area of activities, funda-mental to the success on the shelf, which attracts attention today, but it seems to me the efforts are not sufficient. It is geology, geography and oceanography based on academic science. We descend-ed the bathyscaphes at the North Pole, planted a Russia’s flag on the bottom of the Arctic Ocean, but the time has come long to fundamentally study Arctic geology, shelf geography. This must be done thoroughly, at the academic level with the use of innovative methods and techniques, and not just for the sake of deposit exploration. It is important to remember an approach that has always

distinguished Russia — fundamen-tal, consistent, meticulous academic research of the Arctic area, mineral resources and the processes occurring there. It is important to formulate a government request for the systemic ac-cumulation of knowledge that will surely transform into the quality of scientific discoveries and will create favorable con-ditions for the success of the Russians’ activities in the Arctic in all directions, including the defense area.

It is time to define the ranking of pri-orities for this problem, discuss them, appoint the responsible persons from academic and economic circles, assign the timing of implementation — and all will move! Moreover, work is al-ready under way: the good foundation has been laid by studies carried out by the Institute of Earth Cryosphere, Siberian Branch of the Russian Acad-

emy of Sciences; international science conferences are held at the highest level in Salekhard (the city is gradually becoming a mature subject of Arctic facility development with the support from Governor of the Yamal-Nenets Autonomous Area Dmitry N. Kobylkin and a major contribution of the scien-tific community, including Academi-cian Vladimir P. Melnikov). A promis-ing research base with its center in Tyumen and a branch in Salekhard is being developed, which opens the op-portunity of practical studies of such significant Arctic themes as permafros-tology, sea glaciology etc.

— But these research studies are possible if there are projects that need them. And if there is no project, there is no work, you’re saying so?

This is not exactly the case. The State itself should initiate research stud-ies. The latter will require no much mon-ey, no billions of dollars. To resume the general shelf studies, a hundred million

«We descended the bathyscaphes at the North Pole, planted a russia’s flag on the bottom of the arctic Ocean, but the

time has come long to fundamentally study arctic geology, shelf geography. This must be done thoroughly, at the academic level with the use of innovative methods and techniques, and not just for the sake of deposit exploration.».

USC №3(16), 2013 21

dollars is enough, and then the blocks, addresses, programs, projects, and the terms for participation of companies are defined (for deeper and more detailed studies).

— It turns out that the basic points of the offshore projects and academic activities will be integrated with the NSr development and support points?

Of course, these points will invol-untarily coincide. I have already talked about the need to competently revive the bases. Just remember when domesticat-ing the North our ancestors tied this process to something: reasonable logic has always been present at the junction of geography and economy. This logic, I’m sure, will cover many of the current projects in the already existing city-bases.

— In the recent two or three years, there has been growing resistance of international environmental organi-zations to Arctic shelf development activities that began. The things came to an intrusion of the activists into offshore platforms (Prirazlomnaya oil platform) and support vessels. Do you associate such an activity with a real concern for the fragile Arctic environ-ment or admit that the real reasons may be different, including political reasons?

— A combination of both the as-pects is almost always present in the situations like this. It seems to me, the environmental movement consists mostly of people who worry about the future of the Earth. The longer I live, the more I reflect on this. At the same time, both the competitive and perhaps even political factors are present in the Arctic actions of the environmen-talists. It is sufficient to wonder why these people are not engaged in the Caspian Sea with the same passion, be-cause environmentally this area is not

less vulnerable. Potential problems, and most importantly, their effects in the Caspian Sea can be much more danger-ous than in the Arctic. The Caspian Sea is a closed ecosystem and there are major reserves of sturgeons. Vast areas of the Caspian Sea have a depth of no more than 5 meters. If, God forbid, oil spills at such depths, one has to forget about sturgeons. However, there is no such activity of environmentalists in the Caspian Sea region as in the Arctic.

Therefore, I see the trinity in the en-vironmental movement: competition, politics and sincere feelings of people. I think if the protest is sincere — we need to work with environmentalists, take into account their constructive ide-as and concerns to the utmost. We have no right to make mistakes. But when Russia’s rivals clearly act as the driving force of the protest in order to torpedo or slow down the development of our major projects, we must respond in a different manner.

— In the 1990s, the revenues re-ceived from hydrocarbons and redis-tributed by the State helped it some-how solve the problems of economic and social survival in an unusual market environment. However, the development models of the gas and oil industries turned out to be differ-ent. Which of them has demonstrated greater effectiveness?

— In those years, the Soviet Union ceased to exist as a state, most of en-terprises were privatized, its industrial giants were split into parts (for exam-ple, Uralmash, one of the largest com-panies in the country, disintegrated into 20 Uralmash shops). But we were then able to ensure the formation of verti-cally integrated companies in the oil & gas sector and the transformation of the head management entities of oil & gas holdings into the real profit and respon-sibility centers (the transformation of

the Rosneft state-owned enterprise into a public company is an example). In ad-dition, we initiated the inter-branch in-tegration, the emergence of the Federal Law “On Subsoil” and a number of government regulations that generally defined a special path of reforming the fuel & energy sector.

If the reform of the aircraft, ship-building, machine building, and electric power industries since the beginning of the 1990s went in this manner, the en-tire Russian economy would be innova-tive and competitive today.

But I’d like to draw attention to the fact that it is necessary to separate re-form from privatization. Privatization is a political decision, the distribution of property or the creation of a class of owners. This is not reform. Unlike that, we have reformed the oil and gas in-dustry.

— Can we call the lack of market, direct administration, and political will the key to success of oil and gas pro-jects in the Soviet period?

— In Soviet times, the industry also lived by market laws. In the mid-1970s, a ton of oil at Samotlor was worth 1 ruble 50 kopecks, whereas it was sold abroad for currency — the barrel was sold at an average of US$ 20. So a huge market already functioned at that time. Major projects, primarily invest-ment ones, are extremely beneficial in all their forms, while how they are arranged (through a state structure, through state planning) is another is-sue, an administrative affair.

— Let’s get back to the events of the time: who has “frozen” Stockman?

—The postponement of the Shtok-man field development is a decision made by Gazprom, a corporate deci-sion, and it is not even a decision made by the state.

— Maybe it would be better to en-trust a private company with such a project?

— Many people say that private com-panies are more efficient …A private store — yes, more efficient, a private res-taurant — more efficient. For a company employing more than 100,000 people, it doesn’t matter, whether it is public or private. In large companies, the profes-

«apart from the “hung” Stockman project, we have good experience with the Sakhalin-1 and Sakhalin-2 projects,

which were initially created in more complex water and ice conditions than in the Barents Sea. Launched in the 1990s, these projects are still in successful operation. But we need to refine: they were initiated by the State, which created all conditions for companies to operate actively».

OIL & GAS PrOJeCTS

22 USC №3(16), 2013

sional level of management, the nature of goal-setting, clear objective setting, mobilization of employees are of para-mount importance. Performance effi-ciency is ensured by these parameters.

Incidentally, the undisputed advan-tages of private companies are usually maintained by either those who are striving for the next carve-up of national (or already private) wealth or people who do not understand the essence of corporate governance.

It’s another matter that over many years of new economic relations we have failed to establish national institutions that really affect the companies’ activi-ties. We are trying to identify something: think, write, argue, design …Possibly, we just had not enough time: did we as-sume in 1991 what our economy would look today?

Of course, it is easier to “bless” a state-owned company from above with the implementation of any project. But, again, the result will depend on the level of competence and responsibility of management, which necessarily im-plies informing the political leadership timely and truthfully about the situa-tion in the “entrusted section” and the presence of creative skills to develop solutions to any problems, as well as the ability to solve problems independently and effectively.

For example, in recent years totally non-private Rosneft has significantly in-creased the efficiency of work in the

Yugansk deposit region. Today, all the service companies operate there more efficiently than before, production costs are reduced. As a result, the company it-self and our economy as a whole are the winner. And it is no secret that many private companies are far behind Ros-neft in performance efficiency.

By the way, in the West, one company takes over another precisely because it is more efficient. Because of this, many companies valued even at US$ 10 billion die. And billion-dollar enterprises grow like mushrooms after the rain, but disap-pear very quickly sometimes, too.

— Some time ago renewable energy projects started as an alternative to hydrocarbon fuels and now they are on the brink of the abyss in europe. What is your prediction for their future?

—The current situation is a good example, a good comment on the thesis that everything in the West `is decided correctly. No! Everyone has the right to make a mistake. Although

we warned that the real alternative to hydrocarbons is a matter for the future. I’m, too, for alternative energy sources and also want a clean environment and eco-friendly equipment. But when you consider that this is a subsidized project, the state has to decide where the money should be taken from to implement and support of this project — from the pen-sion fund, the social sphere…

— Finally: How do you assess our in-dustry’s capabilities to develop the technology necessary for full-fledged operation on the shelf?

—What can I say: if there are no tech-nologies, it is necessary to develop them and adapt foreign advances through our companies. For me, the “Chinese Won-der,” encouraged largely by the example of the Soviet Union, is an example. I’m talking about the results rather than methods. We launched the first satellite and built the most powerful nuclear in-dustry as early as the 1950s. And what have we created at the end of the 20th century? What new have we done for Russia for more than 20 years since the beginning of the 1990s?

Once we count what has been done, we’ll see: China is going along the Soviet Union’s road. Aside from the two as-pects, which China has clearly taken into account and avoided catastrophic mis-takes. First, we socialized all small-scale production and eliminated it, whereas China is developing it both in agricul-ture and industry. Second, they have not isolated themselves for some reasons (re-assessment of our experience or the historical and geopolitical reasons), while the Soviet Union was in isolation. The Chinese actively went out and go out abroad — they grab markets, work, learn.

I have been often to China. Today the bulk of the population there is still backward, uneducated — and how much they produce! Because they take the best (where they can), adapt and launch in mass production…

There are a lot of good work practices abroad and they have a lot to learn from them. But it is even more important to us to refresh our own historical memory and firmer grasp that we are able and must achieve the desired results in a highly competitive global market.

Interviewed by Alexey Kravchenko

«It is important to clearly define the main

objectives for all participants of the “Big arctic Game” today and not in 15–20 years, so that to determine the contours of the unprecedented mega project as soon as possible».

USC №3(16), 2013 23

Brazilian newspapers have recently circulated photos of two smiling young mulatto women in the uniform of merchant fleet officers. They were entrusted with the command of a new oil tanker built in the shipyard of rio de Janeiro for the Transpetro state company. Ms Ildeleni Lobato, 39, is a newly appointed captain of this ocean-going tanker named romulo almeyda, and Ms Vanessa cunha, 30, is its chief officer.This is a rather uncommon story for any maritime state, and it is especially remarkable for Brazil: it breaks down many long-established stereotypes about this largest South american country which foreigners usually associate with football, amazon jungles and carnivals where pretty mulattoes dance to fiery rhythms of samba.

BraZILIaN WaYThe Brazilian shipbuilding industry has recovered and is rapidly developing under the control and with the support of the state

OVerSeAS eXPerIeNCe

24 USC №3(16), 2013

Igor Varlamov, ITAR- TASS correspondent  in Rio de Janeiro

f course, Brazil has them all. But today’s portrait of the country that attained the sixth greatest GNP in the world would be incomplete without mentioning, in particular, a successfully growing

branch of its economy — the civil shipbuild-ing industry. The Brazilian merchant fleet counts 397 vessels, including ocean-going, coasting and inland water ships. According to forecasts of the National Water Transport Agency, by 2020 the

country will need about a thousand vessels. It means that a deficit of 600 ships will have to be covered in seven years to meet urgent require-ments for efficiency and security.

Experts reckon now that the Brazilian ship-building industry is one of the most dynamically growing markets in the world. It is a peculiar market for the largest South American country needs, besides transport ships, oil-drilling and oil-producing sea platforms and replenishment ves-sels for the sea oil deposit maintenance system. Indeed, the prospects of the Brazilian oil industry are inseparably linked to the exploration of deep-water (or subsalt) deposits.

“Nowadays all businesses engaged in shipbuild-ing, as well as international owners and operators of dedicated sea carriers and maritime equipment closely watch Brazil which is a rapidly growing market”, — notes Augusto Mendoza, the President of the Brazilian Association of Shipbuilding Com-panies BASC (Portuguese acronym — Abenav). In his opinion, “the rise of the shipbuilding industry will be an effective contribution to the develop-ment of national industry as a whole”.

At present Brazilian shipyards employ about 60,000 persons, but in the next three years the number of job positions in the industry is expect-ed to exceed a 100,000 mark. At least seven new shipyards are planned for opening, which means that about 20 billion Brazilian reals (approximately 10 billion USD) should be invested.

As was said above, the country will soon need some 600 vessels of different types. According to estimates of the National Bank of Social and Eco-nomic Development, a shipbuilding programme of such scope will call for at least 55 billion reals of investments during next 4–5 years.

The BASC informs that current production of the Brazilian shipbuilding industry now approaches

О

By 2020 the Petrobras intends to invest

180 billion reals into construction of 105 oil drilling and producing sea platforms, 542 auxiliary vessels and 139 tankers.

USC №3(16), 2013 25

that of the leading countries such as Japan, South Korea and China. This is an outstanding progress compared with the 1980–1990s when Brazilian shipyards, which had before provided jobs for 40,000 persons, were badly hit by the crisis and could not withstand international competition. By the end of the 1990s the shipbuilding companies employed less than 2,000 persons. The major Bra-zilian shipping companies, such as Lloyd Brasileiro, even ceased to exist.

But time changes — and it changes fast. Mr A. Mendosa notes that “the revival of the national shipbuilding industry is based today on the indus-trial support state programme as well as reorienta-tion of the Petrobras state oil-producing company towards domestic manufacturers”. An important part of the Brazilian success came from the finan-cial sector which timely recognised its prospects and took necessary action. The Programme of Modernization and Expansion of the Fleet (Por-tuguese acronym — Promef) is at the core of the state policy for a large-scale support to the domestic shipbuilding industry. The Programme was started in 2004 by the Transpetro company (a subsidiary of the Petrobras established in 1998) which is currently providing the whole range of shipping services for the national oil-and gas-pro-ducing industry. The Transpetro is now in charge of oil and gas pipelines about 13,000 km long. It owns a fleet of 53 various-purpose ships and has ordered construction of 49 more vessels at the Brazilian shipyards.

According to contracts signed with the Trans-petro shipyards can use foreign components but the basic condition is that the share of “domestic components” in the end product should not be lower than 65 per cent. The Promef initially foresaw the investment of 10.8 billion reals by 2016, but last year the Petrobras announced the new plan: by 2020 the state petroleum company intends to invest 180 billion reals into the construction of 105 oil-drilling and producing sea platforms, 542 auxil-iary vessels and 139 oil tankers.

The Promef was included into the Second Growth Acceleration State Programme PAC-2. This means that the implementation of shipbuild-

ing contracts is under direct control of the federal government.

Special financial tools have been created in sup-port of the shipbuilding industry development. Firstly, a goal-oriented Merchant Fleet Fund has been formed within the Ministry of Transport. Its main source is an “additional tax on freight cost in-tended for the development of merchant fleet”. This tax is collected at the port of unloading at the amount of 10 to 40 per cent of the total freight cost depending on types of goods. The tax is imposed on both imported goods and on freights carried by coastal and internal river lines. Certain goods such as personal luggage of passengers, scientific equip-ment, books and the like, are exempt from the ad-ditional tax.

Secondly, a specialised Guaranty Fund for Ship-building (Fundo de garantia para a construção na-val) has been formed within the Caixa Economica Federal state bank to reduce risks of target financ-ing. Its basic task is to minimise risks connected with vessel construction in shipyards. It must be added that the fund is formed not with federal money but that of private investors. The fund is designed to cover shipyard credit risks as well as deadline non-observance risks for construction orders.

To obtain support of this fund, the shipyard must present a project meeting one of the requirements listed below for the vessel to be constructed. In par-ticular, the vessel must be intended:

> for a Brazilian shipping company operating on coastal or oceanic (off-shore) routes;

> for operation on internal freight or passenger lines with high priority for social and econom-ic development of Brazilian regions;

> for industrial fishing or control of fisheries;> for the purposes of safe navigation;> for works on the Brazilian oceanic shelf (if this

concerns a special-purpose vessel or an oil/gas platform).

oday even adamant opponents to active state involvement in economy admit that the Promef has drastically changed situation in the shipbuilding industry and has produced tangible results.

For instance, the Romulo Almeyda tanker men-

Under contracts with the Transpetro shipyards may use foreign-made components but are obligated to ensure the “domestic component” in the end product at 65 per cent level at the least.

Т

OVerSeAS eXPerIeNCe

26 USC №3(16), 2013

tioned above is in fact the fourth ship transferred to the Transpetro by domestic shipbuilders in the last two years. Its “nationalisation level” reached 72 per cent. Earlier this Brazilian oil-transporting company received three tanker vessels: Celso Fur-tado, Sérgio Buarque de Holanda and Juan Candido. Two more vessels — José Alencar and Anita Gari-baldi — were launched on water for fitting-out and sea trials. The latter vessel is distinguished by being listed in the Panamax category.

It is common knowledge though that imple-mentation of any ambitious programme — and the Pmef is surely such programme — rarely goes on unimpeded, without shortcomings and slips. In particular, it is not infrequently that rapidly growing shipyards lag behind contract deadlines. For exam-

ple, 15 ships, out of 49 vessels ordered by the Trans-petro, do not yet have keel-laying dates. The Juan Candido tanker was transferred in May 2012 after a 21-month delay. Multiple claims and complains are addressed to the Southern Atlantic shipyards (Esta-leiro Atlantico Sul) situated in the state of Pernam-buko in the North-Eastern part of Brazil. However, the Transpetro managers are rather optimistic: they consider all emerging problems as the inevitable by-products of the explosive growth and as a result of losing experience in implementing big projects on tight schedules.

As could be expected, the development of the Brazilian shipbuilding industry with direct and in-direct state support provokes a negative reaction from other members of the World Trade Organiza-tion with well-developed shipbuilding industries. First of all, it concerns Japan, South Korea and Chi-na. However, no member-state has yet submitted a formal protest regarding the Promef. Moreover, many foreign manufacturers of high-technology ship equipment consider Brazil as a very lucrative market — even within those 35 per cent of “import components” allowed for vessels built in domestic shipyards”. Experts are not surprised at all. In the period when industries in developed countries suf-fer from crisis and even setbacks in production, the opportunity of selling high-technology ship equip-ment to Brazil outweighs benefits from sending formal protests to the WTO.

At present Brazilian shipyards employ

almost 60,000 persons. In the next three years the number of jobs in the industry may exceed 100,000. At least seven new shipyards are planned for commissioning, which implies investments of

about 20 billion reals (ca. 10 billion USD).

USC №3(16), 2013 27

r. ruksha, how is the nuclear ice-breaker fleet evolving today? What has changed over the past year, what major decisions have been made?

— Sustainable development of the nuclear-

powered fleet is unthinkable without its renewal. Last year, the state made a number of important steps in this direction.

The RF Government issued Decree No.660 of June 29, 2012 “On the Implementation of Public Funding in the Construction of the Lead General-Purpose Nuclear-Powered Icebreaker.” The docu-ment, signed by Dmitry Medvedev, prescribed in detail the procedure for public funding in the con-struction of a new-generation nuclear icebreaker, which is of strategic importance to our country. The Rosatom State Atomic Energy Corporation was appointed government customer, while the Federal State Unitary Enterprise of the Nuclear Fleet (FSUE Atomflot) — the customer (project developer). On August 23, Atomflot, which is part of Rosatom, and LLC Baltic Plant — Shipbuilding signed a contract on building the lead new-gener-ation Project 22220 general-purpose nuclear ice-breaker. Under the contract terms, the building contractor agrees to build the LK-60Ya icebreaker on turn-key basis and berth it by Atomflot’s pier in Murmansk by December 30, 2017. Keel-laying of the icebreaker is scheduled for November 2013, launching — for November 2015. The cost of the lead new-generation icebreaker is 36 billion 959 million 600 thousand rubles. On January 16, Rosatom announced two open tenders for the right to conclude contracts to build two follow-on Project 22220 general-purpose nuclear icebreak-ers. According to the tender documents, the two nuclear-powered ships will be built for 5 years each: the first ship — from January 2014 to De-cember 2019, the construction of the second ves-sel is set to begin in January 2015 and be complet-ed in December 2020. The cost of the first follow-on nuclear-powered ship will be nearly 42 billion 2 million 810 thousand, the second — 44 billion

102 million 620 thou-sand rubles. The dif-ference in price is due to inflationary pres-sures

If these shipbuilding projects are success-fully implemented, the Russian nuclear icebreaker fleet will finally get solid prospects for its activi-ties. And thus it will provide an effective solution to the political and economic tasks that support the sovereignty and the ongoing development of the Russian Arctic.

Another key factor of the sustainable opera-tions of the nuclear fleet is its workload, which economic stability depends on. Now Rosatom-flot’s relationship with shippers is becoming long term. On November 12, 2012 in Moscow, Chair-man of the Board of Novatek Leonid Michelson and Rosatom CEO Sergey Kiriyenko signed a general cooperation agreement. It provides for the conclusion of a long-term contract for ice-

GUIDING ATOM

Director General of FSUE AtomflotVyacheslav Ruksha — on the economic and strategic benefits of new-generation nuclear-powered icebreakers

“ THere IS NO aLTerNaTIVe TO THeM  IN THe arcTIc”

-M28 USC №3(16), 2013

routing services along the Northern Sea Route for a period of at least 15 years. On July 10 this year, a similar agreement (for a period not less than 15 years) was signed between the Rosatom State Atomic Energy Corporation and JSC Gazprom Neft.

— What will distinguish the new nuclear ice-breaker fleet from the existing one? What advanced conceptual solutions and technolo-gies implemented in it would you note?

— Many years of experience in fleet opera-tions in the Russian Arctic suggest that nuclear-powered icebreakers with an icebreaking capa-bility of up to 3.5 meters are needed to provide guaranteed year-round navigation along the whole Northern Sea Route and Arctic shelf development. Their capacity should be around 110 MW. This is the task of the future, but we have to think about

solving it in advance. Reliable year-round naviga-tion in the Western Arctic can be provided by nu-clear icebreakers with an icebreaking capability of 2.8–2.9 meters, which corresponds to shaft power of 60 MW.

Renewal of the icebreaker fleet through build-ing a series of new-generation general-purpose nuclear-powered icebreakers by 2030 is a key requirement for its sustainable long-term develop-ment. New nuclear-powered vessels are multifunc-tion: they can not only provide ice-routing services for vessels, but also rescue people and vessels and eliminate marine oil spills.

The icebreaker will have two working drafts: CWL draft of 11 meters and the minimum (bal-lastless) draft of 9 meters. The main differences between the new two-draft icebreaker and Ark-tika-class icebreakers are as follows: increased

beam — 34 m versus 30 m; approximately 50% higher weight; a new one-piece steam-generating plant, which is more reliable, safe and compact; improved hull shape enabling an increase in the icebreaking capability up to three meters; service life of 40 years. The “newcomers” are markedly more effective than their predecessors. It will be possible to ponder over year-round navigation along the Northern Sea Route for the first time.

— Is the rITM-200 the only feasible reactor plant for future ice-breaking projects? Are any alternative propulsion systems being consid-ered?

— The RITM-200 is definitely the single pro-pulsion plant for the three two-draft icebreakers; ship detailed design has been developed to accom-modate it and all the safety, EIA, and feasibility

studies have been made on the basis of this design. As to future nuclear-powered ships, there is the Federal Program “World Ocean”, which includes the Marine Equipment subprogram. The latter ac-commodates power plant development options for the Lider icebreaker. Nevertheless, previous operating experience with the OK-900-type nu-clear steam-generating plant and its modifica-tions has shown high efficiency due to equipment uniformity. I hope that the RITM-200-type plant will make it possible to build icebreakers of higher capacity, too.

— Is Atomflot ready to assist shipbuilders to get better reactor plant prices from Afrikantov OKBM?

— We are very pleased that LLC Baltic Ship-yard — Shipbuilding and JSC Afrikantov OKBM

«With the new nuclear-powered ships, the russian nuclear-powered  icebreaker fleet will finally get solid prospects for its activities».

USC №3(16), 2013 29

have already signed a contract to supply two RITM-200 propulsion plants in complete sets

— How do you assess the initial experience with mobile emergency response teams on board Atomflot’s ships?

— These teams have been around for more than two years, but, fortunately, they have not had to use their professional knowledge and skills so far. The Ministry of Transport is responsible for the maritime emergency and rescue system, and we are part of the system. We are also cooperating with the Ministry for Emergencies and I hope we’ll be able to formalize the relationship this year.

— The activity of foreign and international environmental organizations under the umbrella slogan “russia must postpone the oil and gas de-posit development in the Arctic because of exces-sive environmental risks” has sharply increased recently. Do you think they are really concerned about the ecology of the region or their de-marches are caused by some other reasons?

— I think this question should be addressed to those closely related. Large public and private companies are engaged in oil and gas field devel-opment. We provide them with services on a con-tractual basis.

— And what is the relationship between Atomflot and environmental organizations, both domestic and foreign? How is the system of envi-ronment protection measures arranged?

— As to Rosatomflot’s relations with envi-ronmental organizations, they have always been constructive — I can state this confidently. One example is our collaboration with Bellona, an authoritative Norwegian environment protection organization. After the collapse of the “Iron Cur-tain”, the Norwegians began to actively explore the nuclear and radiation safety issues in the civilian nuclear fleet. For better understanding and objec-tivity, our specialists have always provided them with all the information they needed. The infor-mation was then included in the fairly compre-hensive Bellona reports published in English and Russian. Such openness could not but lead to mu-tual trust and confidence between the parties. As a result, Bellona has moved from the oppositional attitude typical of all “green” organizations to con-structive actions aimed to establish a system of support from Norway and the European Union in addressing our nuclear facility safety problems that have accumulated over years. The project for disposal of the Lepse maintenance ship, which is entering its final stage, is an illustrative example of such cooperation. The mother ship is being prepared for cutting at the Nerpa Repair Shipyard and all the difficult issues of international coop-eration on the road to this stage of the project are past. Bellona, too, has played a useful role here, its leader Frederic Hauge has been a frequent and, I would even say, welcome guest in the nuclear fleet.

Since 2008, when the nuclear icebreaker fleet was transferred to the Rosatom State Corpora-

«The “newcomers” are markedly more effective than their predecessors».

GUIDING ATOM

30 USC №3(16), 2013

tion, the relationship with various environmental organizations has been coordinated by the Public Council for the safe use of nuclear energy in the Murmansk Region. We have been actively coop-erating with the Council, moreover in dialogue mode. The Council has repeatedly held its on-site meetings at Rosatomflot’s sites with the participa-tion of the environmental community and media representatives.

FSUE Atomflot has a system of environment protection measures in place that relies upon a comprehensive sound policy in the field of envi-ronment safety, quality and protection. Measures to ensure nuclear, radiation, environmental, indus-trial safety and navigation safety have been elabo-rated in detail and are being implemented. We regularly issue environmental safety reports for public awareness, which can be found on our web-site. This year, we have joined the Environmental Declaration (Murmansk Governor Marina Kovtun signed it), thus confirming once again our com-mitment to environmental protection.

— How would you comment on the statements of some foreign experts that the global warming

processes will free the Northern Sea route of the seasonal ice cover later this century and will make russia’s maintenance of the world’s single group of nuclear icebreakers meaningless?

 — By and large, I have been always confused by the media campaign aimed to prove that global warming in the Arctic is inevitable. In my opin-ion, the world science has not advanced enough to make such long-term forecasts. All these as-sumptions are based on the study of the climate processes over a very short period of time, meas-ured by the last decades. Besides, the science itself states that hundreds, thousands, or even millions of years are required for global climate changes to occur on the planet.

«“FSUe atomflot has a system of environment protection

measures in place that relies upon a comprehensive sound policy in the field of environment safety, quality and protection».

USC №3(16), 2013 31

Now we are working with 70,000, 100,000 and 150,000 DWT vessels. In Yamal, vessels of about 150,000 tons will be used. The capacity of these vessels is 35–40 MW. This is the level of Taimyr-class icebreak-ers. This is quite differ-ent navigation.

I am convinced that, with the advent of the LK-60A class icebreakers and new Arc7 class LNG carriers with a capacity of about 40 MW, we will have to consider the economics of year-round navigation along the Northern Sea Route as early as 2018. This is extremely important for the hydrocarbon industry of the Yamal region: we will be able to trade for the first time in the Pa-cific Ocean markets.

— Is it possible to disclose the comparative data on the cost of icebreaker assistance provid-ed by conventional and nuclear icebreakers? Is this comparison advantageous for nuclear ice-breakers?

— In connection with amendments made to some legislative acts pertaining to state regula-tion of commercial navigation in the Northern Sea Route waters and the adoption of the new “Rules of sailing in the Northern Sea Route wa-ters,” approved by the Ministry of Transport on July 17, 2013, the principles of payment and tariff regulation for services rendered by icebreaker fleet, including the nuclear-powered one, have changed. Payment will be charged only for the “icebreaker assistance for vessels in the NSR waters (dues paid by ship owners) based on the actual volume of services provided, taking into account the size and ice-class of the vessel, the

However, here’s a fact of recent decades: the total  ice area in the Arctic Ocean has halved in the summer-autumn period (see chart), which contributed to more intense transit passages at this time of year.

We have seen a steady increase in transit freight traffic along the Northern Sea Route since 2010. Even large vessels of 50,000 to 150,000 DWT, which have never been seen here before, came to the Arctic. Only powerful nucle-ar icebreakers are able to provide reliable and safe navigation of these giants along the new intercon-tinental route. For now, there’s just no alternative to them.

— Do you personally support the construction of an even more powerful, 100-MW, icebreaker? And is it possible to use nuclear icebreakers in regions other than the Arctic in future?

— The model of fleet operations is changing fundamentally. The assessments that existed be-fore are no longer valid today. Take for example the icebreaker Sovetsky Soyuz. Over the past five years, its reactor plant has operated half of the operational time at 12 to 20% of its power. This is harbor mode. It was not until our icebreakers be-gan working in the White Sea and even more in-tensely in the Baltic Sea that we have realized what linear shipping means. When the Vaygach went to the Baltic Sea in the first year, its monthly nuclear fuel burn-up exceeded the average rate twice. In the Baltic Sea, we produced more than 100,000 megawatt-hours for the first time. For the first time we faced with the fact we had not even a day in a month for maintenance work. We often piloted also vessels that far exceeded the nuclear-powered ships in size.

Prior to 2007, we worked with the vessels displacing up to 20,000 tons. These vessels were comparable to our icebreakers in weight and size.

«With the advent of the LK-60 a

class icebreakers and new arc7 class LNG carriers, we will have to consider the economics of year-round navigation along the Northern Sea route as early as 2018».

On 23 August the russian Prime-Minister signed a di-rective to allocate funds from the federal budget for the construction of two atomic-powered icebreakers intended for operation in the Northern Sea route. The vessels are to be commissioned by the end of 2020. One more icebreaker shall be built by 2017.At present five icebreakers equipped with nuclear power-plants are deployed to support navigation in the Northern Sea Route. By 2020 four of them will end their service life and

only one will remain in service in the Northern Sea Route, namely the “50 Years of the Victory” icebreaker built in 2007 which is still the world’s most powerful icebreaker of this type. The ships with expired service life will be replaced gradually: by the end of 2020 three new icebreakers shall enter into operation. The first, leading ship shall be built in 2017, and two serially built ones in 2019 and 2020 respectively. Versatile icebreakers of this type will cost about 43 billion roubles each.

By 2020 annual cargo traffic via the Northern Sea Route may grow more than eightfold: up to 30 million tonnes at least. The Russian deputy minister of transport Victor Olersky says that about 15 million tonnes will be provided by cargo flow from the Yamal port of Sabetta, and about 15 million tonnes will be transit cargoes.Deposit reserves in the Yamal Peninsula require that the port of Sabetta, still under construction, should be able to accept more than 220 ship entries per year. Each oil plat-

form among dozens situated in the shelf of the Barents and Kara Seas will be served by two or three vessels. In 2010 1.8 million tonnes of cargoes were shipped along the Northern Sea Route, and four transit passages were made with 0.11 million tonnes of cargoes. In 2011 cargo traffic almost doubled reaching 3.25 million tonnes (transit traffic was 0.83 million tonnes). In 2012 the overall cargo traffic attained 3.87 mil-lion tonnes and transit was 1.2 million tonnes.

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32 USC №3(16), 2013

escort distance and navi-gation period.” Tariffs for such ice-breaking escort services are being devel-oped. It will not be possible to talk about the new rules until a year of working to them.

Today, shipping along the Northern Sea Route with assistance of nuclear icebreakers is arranged on the basis of contracts with customers, which need such icebreaking services. There are state tariffs for these services. It is clear that the cost of particular icebreaker assistance depends on many factors related to the climate (ice) conditions on the route and the features of the vessel itself that delivers cargo. All of these points are also included in the contract. Question: would nuclear-powered ships’ services be in demand if it were not profitable? For example, Swedish company Marinvest reported in the press that an

average saving from one freight transit voyage along the NSR for a 75,000 DWT tanker was US$ 500,000.

It is not easy to compare the economic indica-tors of icebreaker assistance provided by nuclear and conventional icebreakers. The operation conditions dictated by the design features of the ships differ markedly. Let me explain with an example. For a nuclear-powered ship, nuclear fuel is purchased once every 5–7 years. We have to advance its purchase by paying large lump sum. But, on the other hand, long-term reserve of this fuel provides virtually unlimited endurance of the ship. On the contrary, a conventional ice-breaker has to periodically and quite often leave the ice routes for refueling with fossil fuels — and this involves additional and considerable costs. We are effective in heavy ice and vessel traffic conditions, meaning that the Arctic seas will be our main work area.

Interviewed by Alexey Kravchenko

«The model of fleet operation is changing.

The assessments that existed before are no longer valid today».

USC №3(16), 2013 33

after the Soviet Union had disintegrated the russian industry entered a new way of development by producing oil and gas extraction equipment. Shipbuilding faced new challenges brought by the change of political epochs. The crisis 1990s were the period when the defence industry was surviving: its production volume plummeted then and development almost stopped. Defence plants had to restructure themselves along conversion lines: each looked for a niche in civil production trying to preserve science-intensive technologies and qualified personnel. along with the execution of the reduced State Defence Order production programme, the Sevmash started series production of civilian vessels of different types and development of sea platforms. construction of the Prirazlomnaya offshore stationary platform in the oil field of the same name was the key project of the Sevmash civil sector.

Director General of the joint stock company “PO Sevmash” Mikhail Budnichenko speaks about the construction of a unique ice-resistant offshore platform and shipyard’s basic projects for Arctic exploration.

THe FIrST STeP INTO THe arcTIc SHeLF

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34 USC №3(16), 2013

esign and fabrication of the Prirazlom-naya caisson structures were started in 1995. However, due to various reasons, such as absence of funds, change of the customer and project, etc., the con-

struction works recommenced only six years later after the JSC Gazprom and JSC Sevmorneftegaz had concluded an agreement on the exploration of the Prirazlomnoye oil field. Since that time the pace of works increased markedly: suffice it to say that it took only two years to build four super-blocks. One super-block has weight-and-size pa-rameters comparable to those of the Akula-class largest nuclear-powered submarine.

The ice-resistant stationary offshore platform is already mounted at the assigned point in the Pe-chora Sea, and all its systems are now undergoing activation. This June the Sevmash handed over the platform to the customer — the JSC Gazprom. The defence plant gained unequalled experience while implementing this civil project, which still needs assessment. It is clear even now, however, that the project is unique. It is unique techni-cally because the platform characteristics allow the “floating island” to extract, store and transfer oil to tankers in harsh climatic conditions at very low temperatures. It also proved unique for the Sevmash mainly because the plant managed to organise, while mastering production of oil and gas equipment, effective cooperation of hundreds of Russian enterprises developing oil and gas ex-traction equipment.

— Mikhail Anatolyevich, the Sevmash com-pany has passed a long and thorny way to the construction of the Prirazlomnaya ice-resistant offshore platform. What lessons has the com-pany drawn from this project implementation?

— Much work has been done during the con-struction of the Prirazlomnaya platform. During that period the shipyard gained vast operational experience in the oil and gas industrial sector, passing a difficult path from project approval, to construction, to equipment delivery. Our manag-ers learned how to deal with foreign contractors and planners, while designers, process engineers, economists and logistic officers improved their qualifications. The enterprise formed the re-quired production base. Significant investments were made into new equipment of shops and laboratories. Dozens of new technologies, previ-ously unused in this country, were developed and realized in practice. They include rolling of 15,000-tonne superstructures upon the platform caisson, production of cold-resistant steel struc-tures, jointing and welding of large-size structures afloat. The super-blocks for the Prirazlomnaya caisson were built with the application of modern optical systems. In 2010 the mammoth platform

was transferred from the Sevmash wharf to Mur-mansk for the completion and ballasting in the deep water area. In 2011 the platform of about 250,000 tonnes was mounted at the drilling point in the Pechora Sea.

The Sevmash proved that it could create unique oil and gas extraction equipment. This ca-pability is also backed by the geopolitical aspect. Our enterprise is the only Russian shipyard with a direct access to the ocean. Actually the plant is capable of building equipment of any size. We are also ready to upgrade our production capacities to satisfy state requirements for building large engi-neering structures which would allow achieving national goals in the Arctic.

— How important is the oil and gas production component in the Sevmash operations? What has helped the company to create its own unit work-ing in this area?

— We understand that extraction of hydrocar-bons on the shelf of the Arctic seas is a strategic task for Russia whose national economy and security depend on its solution to a considerable extent. However, setting up support facilities in Arctic oil and gas fields requires production of complex engineering structures that must meet operational requirements set out for the Extreme

D

«after the JSc Gazprom and JSc Sevmorneftegaz had signed

the agreement on the development of the Prirazlomnaya oil deposit, the pace of works markedly increased: suffice it to say that it took only two years to build four super-blocks. The mass and size of each super-block are comparable with those of the akula-class largest nuclear-powered submarine».

Mikhail Budnichenko

USC №3(16), 2013 35

North. The production of such equipment can be well compared to production of the most complex high technology items such as nuclear-powered submarines. While continuing to execute the state defence order, the Sevmash started its integration with the oil and gas industry by building facilities for land-based fields.

In 1990 the shipyard launched production of a range of equipment, including dust collectors, sepa-rators, reactors, water desalinators, heat exchang-ers, wellhead equipment, swivels, technological and accommodation modules, pipe manifolds, compen-sators, scaffold bridges, reservoirs and many other articles. Our technological modules are efficiently operated in the early oil production station at the Kharyaga deposit. Since 1998 our plant has manu-factured 280 domestic and technological modules and various-purpose blocks for equipping the Tedinskoye, Oshkotynskoye, Ardalinskoye, Dyusu-shevskoye, Vostochno-Kolvinskoye, Peschanoozer-skoye and Krapivinskoye deposits.

The Sevmash confirms its expertise and quality of products and works with licenses and certifi-cates for design, production and diagnostics of equipment made for the oil and gas, petrochemi-cal and other industrial branches, issued by the Russian official organizations (Rostekhnadzor, Russian Registry of Shipping) and foreign clas-sification societies (Germanischer Lloyd, Lloyd’s Register, DNV).

The construction of the Prirazlomnaya ice-resistant stationary offshore platform stands alone as a project. At the same time the Sevmash has also built two MOSS CS-50 type semi-submersi-ble platforms and a number of structures for the Arkticheskaya self-elevating drilling rig.

In the 2000s the share of civil oil and gas pro-ject orders amounted to 30 per cent of the ship-yard total production value.

— In 2013 the Gazprom plans to begin drilling works at the Prirazlomnoye oil field. What im-portance do you think such projects assume for the industry?

— They have immense significance. Despite the fact that the Prirzlomnaya platform was not put into series production, this pilot project start-ed off development of a whole series of technolo-gies: from production of new cold-resistant steels, to creating technologies of their processing, to production of equipment capable of operating

«While mastering the production of oil and gas equipment the plant

managed to organise efficient cooperation of hundreds of russian enterprises focussed on the development of oil and gas production technologies».

Checking drilling equipment

MAN-MADe ISLANDS

36 USC №3(16), 2013

at low ambient air temperatures. Actually a new cooperation of enterprises and organizations was set up and focussed on the implementation of one task: that of building vessels and technical equip-ment for operations in the Arctic.

— Where and how will qualified personnel be prepared for full-scale production of offshore platforms, as well as for establishment of a maritime technologies research centre in russia?

— The Shipbuilding and Arctic Maritime

Technology Institute (ISMART) was founded in 2012 on the basis of the main higher educa-tional institution preparing specialists for the Sevmash. It is the only institute of a broad tech-nical profile in the region of the Extreme North. These days it makes part of the Northern Arctic Federal University which is assigned a major task of becoming the centre for innovative and techno-logical development of the Arctic region, the core of preparing world-class specialists in designing, building and repairing seagoing vessels and ships, developing and introducing new technologies for the production of hi-tech maritime equipment employed in exploration and extraction of natural resources in the Arctic shelf.

Exploration of the Arctic shelf is a good open-ing for shipbuilders. The Sevmash is ready to make its contribution to the development and ex-ploration of oil and gas deposits.

Press-service of the JSC “PO “Sevmash”

The platform is an all-metal engineering con-struction 126 m x 126 m x 120 m, weighing about 110,000 tonnes. It consists of a supporting base (caisson) and superstructures. The supporting base of the Prira-zlomnaya ice-resistant sta-tionary offshore platform is structurally divided into four super-blocks weighing about 20,000 tonnes each. The super-blocks are built in the assembly shops, jointed afloat and welded underwater with the application of the proprietary technology of the enterprise. The jointing op-eration involving structures of such size has been carried out for the first time in the world. Construction of the

facility was finalized at the SRZ-38 and then it was sent to the installation point in the Pechora Sea. The Prirazlom-naya is really unique in being the first ice-resistant station-ary offshore platform capable of operating at temperatures as low as minus 50 degrees Centigrade and withstanding high ice loads. The platform has a wide range of func-tionality. It can drill about 40 boreholes up to 7,000 me-tres deep. Besides oil drill-ing and production (annual output is estimated at 6,6 mln tonnes), the platform can perform other functions as well. For example, its caisson has built-in reservoirs de-signed to store 136,000 cu.m of crude oil.

AUXILIARY MODULE

CAISSON

TOP SUPERSTRUCTURE

ACCOMMODATION MODULE

INTERMEDIATEDECK

TECHNICALSPECIFICATIONS

Discussion of production issues

«Together with the execution of the state defence order,

the Sevmash began integration into the oil and gas industry by building support facilities at the Tedinskoye, Oshkotynskoye, ardalinskoye, Dyusushevskoye, Vostochno-Kolvinskoye, Peschanoozerskoye, Krapivinskoye and Kharyaga fields».

USC №3(16), 2013 37

INeXHAUSTIBLe reSOUrCe

Analysis and the economic outlook of marine renewable energy sources

Efficiency does not matter when the gods pay for wavesStephen Salter, a British researcher in ocean energy

In several 2012 issues of USc’s magazine, we talked about new renewable ocean energy projects that are promising for global shipbuilding industry. In fact, they can be divided into two areas. The first area deals with major coastal tidal and wave energy hydraulic works. a special center has been established in russia to address these issues and their economics has been well studied. The second area comprises offshore, open-sea and ocean energy generation (ocean energy). r&D efforts undertaken in this area abroad have intensified over the last decade and already provoked the creation of a new sector of the world economy with billion-dollar investments. Unfortunately, in our country this area is still in its infancy. Therefore, this article focuses mainly on the present state of ocean energy activities in other states.

THe aBYSS OF eNerGY

(Continued from issue No 2 (10), 3 (11), 4(12) 2012)

38 USC №3(16), 2013

A. A. Gorlov,Head of the Energy of the Ocean Project Shirshov Institute of Oceanology, RAS

economics of commercial renewable offshore energy projectsHundreds of demonstration power

plants using the energy of wind, wave and tidal currents in the open sea have been built abroad in recent years. But only the United Kingdom has brought several of these renewable power plants to industrial prototypes which have become the full-fledged participants in the domestic energy market. We will look at British valuable experience in detail using the analysis reports issued by the UK Trade & In-vestment Department and reputable company RenewableUK.

The United Kingdom’s economic policy in the field of renewable energy sourcesProgress made in this area is obvi-

ously associated with the UK gov-ernment’s strategic course towards the transition to renewable energy sources and broad public support. Thus, as part of its efforts to counter global warming, official London an-nounced its intention to reduce the amount of greenhouse gases emit-ted into the atmosphere by 34% by 2020 and by 80% by mid-century. The United Kingdom plans to produce more than 15% of its entire energy from renewable energy sources by 2020.

The UK government has developed the Renewable Energy Roadmap and established a number of special organ-izations like the Technology Strategy Board acting jointly with the Depart-ment of Energy and Climate Change (DECC) and regional development research councils. The nation-wide coordination of investment in R&D on renewable energy is carried out by the Low Carbon Innovation Group (LCIG), which includes the DECC, Technology Strategy Board, the Car-bon Trust, the Energy Technology In-stitute (ETI). In early 2009, the ETI allocated GBP 52 million to finance promising renewable energy projects

that have not reached the industrial prototype level and later — another GBP 70 million. More “advanced” pro-jects are funded by the Clean Energy Fund allocating GBP 250,000 to GBR 3 million per project. Moreover, the UK Revenue Service provides ben-efits and even a full tax exemption for R&D projects related to technical in-novation. The UK Government has developed regulations and a controlled financing system that promote the development of renewable energy sources, including also the marine sec-tor. These include: the Climate Change Act, Renewable Energy Strategy (RES), and the UK Low Carbon Transition Plan.

The strength and consistency of winds blowing over the UK make it one of the most suitable European countries for offshore wind energy plants (wind turbines). The growth of the offshore wind energy sector has reached by 30% a year over the last three years, due to the financial and political support from the Gov-ernment. One of the Carbon Fund’s recent programs, Offshore Wind Ac-celerator, provides for the allocation of GBP 40 million for the development efforts aimed to reduce the construc-tion cost of offshore wind farms by 10%. The length of the Great Britain’s coastline is 30,500 km, so it is no won-der that the total potential of wave and

Floating wind power plants

USC №3(16), 2013 39

tidal energy plants is a huge resource that has yet to be mastered. Today, Foggy Albion is already the leader in the field: the country accounts for 23% of all wave power projects and 27% of tidal current energy projects that are under development worldwide.

economics of offshore wind energy generationThe Great Britain has become a

leader in sea-based wind energy gen-eration for more than a decade ago since the installation of two 2 MW wind turbines in the North Sea. Many areas were identified in the waters washing this country, including nine deep-water areas suitable for installing offshore wind power plants. In subse-quent years, the state-owned Crown Estate held three rounds of tenders for the right to build offshore wind farms with total capacity of over 40 GW, designed to generate annual revenue of about GBP 8 billion. The winning projects have attracted huge capital in-vestment, making it possible to bring the offshore wind energy production up to a quarter of the total domestic electricity consumption by 2020.

Three years ago, the leasing agree-ments with investors granted previ-ously for 22 years, were extended to 50 years to improve stability of the business.

In 2008, after commissioning of the Lynn and Inner Dowsing offshore wind farm with capacity of 195 MW, the UK overtook Denmark to become the world’s largest producer of off-shore wind power. In 2010, with com-missioning of the E.ON Robin Rigg offshore wind farm, this power sector reached the level of 1 GW of power for the first time in the world. At the end of 2010, Vattenfall launched the Thanet offshore wind farm into opera-tion, which was largest in the world at that time. The total capacity of the farm is 300 MW and it consists of 100 Vestas V90 wind turbines located at sea 12 km off the coast of England on an area equal to 4,000 football fields.

The experience gained in the oil and gas industry has been used during the installation of the Beatrice offshore wind farm worth GBP 29 million, consisting of two 5-MW turbines, at

a depth of 45 m, 23 km off from the coast of Scotland.

The London Array offshore farm project envisages the arrangement of 341 wind turbines with capacity of up to 3 MW and more in the water area of about 90 square miles. This wind farm with the total capacity of 1 GW will be among the biggest ones in the world. It will supply ener-gy to 750,000 homes and reduce car-bon dioxide emissions by nearly 2 mil-lion tons a year. In the first phase in 2011, the international companies Dong Energy, E.ON and Masdar in-vested GBP 1.9 billion in the project; by 2015, it is planned to attract an-other billion of investment. The next step is a unique project, Britannia, from Clipper Windpower aimed to build the world’s largest 10-MW off-shore wind turbine plant.

economics of sea wave and tidal current energyIn 2012, the Ad Hoc Energy and

Climate Change Select Committee suggested that the UK Government should act more decisively to take full advantage of the wave and tidal power sector of the country, estimated at GBP 3.7 billion. Calculations show that the British wave energy tech-nology has the capacity to produce 50 TWh of electricity, which is suffi-cient to supply electricity to 11 million homes, while tidal currents can pro-vide 17 TWh for supply of 4 million homes. And this is without taking into account the tidal energy potential of around 17 TWh in the estuary of the Severn River (today the UK public decides which technology should be used in the area — with a dam or with-out it). Waves as high as 15 meters come to the Pentland Firth water area and around Scotland’s Orkney Islands from the North Atlantic; there are many inter-island areas in the same place where the tidal currents reach speeds of up to 4 m/s. This area of the country is called Saudi Arabia of wave and tidal power.

According to Renewables UK, by 2030, the whole UK offshore power sector will be estimated at about GBP 1 billion and will be able to meet about 20% of the country’s electricity needs. The DECC has allocated GBP 20 mil-

lion from the Carbon Trust for the offshore power sector development, while Crown Estate held a tender for the conclusion of lease agreements for industrial offshore power projects for the first time in the world. It is planned that generating plants with capacity of 1.2 GW will be installed in the north of Scotland by 2020. Agree-ments for six wave projects and four tidal current energy projects with a total generating capacity of 450 MW have already been signed. Their im-plementation will provide 700 million homes with electricity. In total, the Government has invested more than GBP 60 million in offshore power sec-tor over the last decade.

Scotland has also established the GBP 70 million National Renewa-bles Infrastructure Fund designed to improve the port and production facilities in order to manufacture off-shore power plants. This Fund will attract significant investment from the private sector, will help create more than 28,000 jobs and strengthen Scotland’s economy by GBP 7.1 billion over the next decade. In addition, the GBP 18 million Marine Array Com-mercialization Fund (MRCF) was set up to install offshore wave and tidal energy plants with a total capacity of 1.6 GW in the waters of Pentland Firth and Orkney islands as soon as possible.

Marine energy experimentation centersFor the present, the UK’s marine

wave and tidal current energy technol-ogy sector, according to experts, is lag-ging behind the offshore wind sector for at least a decade. But the country has a large research potential for its development.

The world’s first European Ma-rine Energy Centre (MREC) with a test range for testing wave and tidal free-flowing commercial technolo-gies has been deployed in the north of Scotland in the Orkney area. In addition, the Government is funding the establishment of the South-West Marine Renewables Business Park in the county of Cornwall, which will be the marine wave and current energy sector development center. The Wave

INeXHAUSTIBLe reSOUrCe

40 USC №3(16), 2013

Hub Marine Center located nearby has a test range worth GBP 28 million connected to the electricity distribu-tion network for field testing of wave power plant prototypes. At these marine ranges, researchers obtain the experimental data used to improve the performance of power plants’ ele-ments and develop next-generation wave and tidal energy converters. A new test pool equipped with a wave generator for studies of marine energy converters is being built at the Univer-sity of Plymouth using public funds.

The National Renewable Energy Centre (NaREC), located in Blythe, has a test range used to study the elements of new-generation wind turbines and a test facility worth GBP 15 million, developed specially for testing wind turbine blades up to 100 meters long. Here, the performance of the world’s first commercial demonstration ma-rine farm, consisting of 20 powerful turbine prototypes connected to the grid, was studied. The NaREC has the capacity to test the largest wind gen-erators built so far — precisely this factor was decisive for Clipper Wind-power to launch production of the world’s largest 10-MW marine wind turbine in Newcastle.

commercial marine power plantsThe world’s first commercial plants

using the energy of tidal currents (SeaGen project) and the energy of sea waves (Pelamis project) were devel-oped in the UK and connected to the national grid system. Even before the SeaGen turbine development, Marine Current Turbines (MCT), a Bristol company, had developed the SeaFlow plant, which in 2003 became the coun-try’s first demonstration free-flowing sea-based turbine. The SeaGen gener-ating set 16 meters in diameter is one of the world’s most powerful and larg-est generators using the energy of tidal currents. Two such underwater tur-bines with a total capacity of 1.2 MW were installed in 2008 in the waters of Strangford Lough (Northern Ireland), where the current speeds reach 4 m/s. Today, these generators, assembled at the Harland and Wolff Shipyard, Belfast, produce electricity for the grid company and became the world’s first

commercial power plant of this type.The SeaGen underwater turbine is

one of the four tidal energy projects that have received the license ap-proval for the installation in the north-eastern waters of Scotland. Here in Orkney, MCT intends to deploy 66 such turbines with total capacity of 99 MW, which is enough to supply 100,000 homes. In 2010, the Siemens Concern decided to support MCT’s success and bought about 10% of its shares.

Pelamis Wave Power (PWP), a com-pany based in Edinburgh, started its development efforts in 1998. Its marine wave power plant was con-nected to the national grid for the first time at the EMEC Marine Centre in 2004. In 2008, PWP won an export

order from Portugal and developed the world’s first marine wave energy farm. The Pelamis floating wave power plant has a quick-release device al-lowing its maintenance at minimum cost and is 180 meters long, which is considerably larger compared with the first-generation model. PWP, which in 2009 entered into a lease agreement with Crown Estate, intends to imple-ment three projects in the waters of the Strait of Pentland Firth and around Orkney: the first 50-MW project (to-gether with Scottish Power Renewa-bles), the second — with the E.ON Concern’s British subsidiary, and the third 50-MW project (PWP plans to deploy and operate it independently). Each of the projects is designed to demonstrate that the Pelamis technol-ogy can be applied on a wider scale.

The Oyster wave power plant, developed by Aquamarine Power (Edinburgh) together with research-ers from the University of Belfast, represents another promising British marine innovative technology. The Oyster is installed on the sea bot-tom and is designed for use wave energy off the coast at a depth of 10 to 20 meters. The project is highly reliable because its structure contains minimum moving parts and all the electrical equipment is placed on the shore. Such a solution ensures long-term operation of the plant in a harsh marine environment. At the initial development stage of the first proto-type, Aquamarine Power received GBP 870,000 from the Technology Strategy Board and GBP 250,000 from the Car-

SeaGen offshore tidal energy farm

Blades of the SeaGen tidal power installation in the shop

Testing of the Pelamis wave energy plant

USC №3(16), 2013 41

bon Trust. In addition, the Govern-ment has funded the development and production of a second-generation Oyster wave power plant by allocat-ing GBP 5.1 million from the Marine Renewables Proving Fund. Later, the company was also supported by pri-vate business.

Dozens of demonstration marine power plants have been developed in the country. Many of them are almost ready for commercial use. For exam-ple, in 2011 and 2012, the EMEC con-nected the following current energy plants to the grid or prepared them for testing: Andritz Hydro Hammerfest’s 1-MW HS1000; Atlantis Resources’ 1-MW AR1000; ScotRenewables’ 0.25-MW SR250, Voith Hydro’s 1-MW Clean Current Tidal Turbine, Tidal Generation’s 0.5-and 1-MW plants (within the REDAPT project); wave energy plants: Pelamis Wave Power’s 0.75-MW Pelamis P2 (2 plants); Aqua-marine Power’s Oyster 800 and Oyster 801 with capacity of 0.8 MW each, as well as wave energy plants from Seat-ricity, Wello and other firms.

Smart power distribution networkThe Government’s strategy provides

for the development of shore and un-derwater systems for electricity trans-mission and distribution from renew-able energy sources, including from offshore wind, wave and tidal energy plants. At conventional power plants, it is possible to establish an on-off schedule, whereas renewable energy projects depend on the variability of the wind and wave parameters. Tidal energy resources are predictable, but are able to function at peak levels only a few hours a day. To cope with un-certainty in electricity supply, as well as to save electricity and reduce its cost, it is necessary to establish a high level of automatic management of ma-rine renewable energy networks. The United Kingdom plans to invest GBP 15 billion to build a marine network to transmit electricity generated by the marine power sector and offshore wind farms to the ground grid system.

Internationally, the development of a smart power system is creat-ing a fast-growing market, which is predicted to reach GBP 27 billion by

2015. The Smart Demonstration Fund has already allocated GBP 6 million for the accelerated development of smart technologies in the country. In particular, the possibility to lay the world’s longest underwater power cable between the UK and Norway is under study. In a route section pass-ing through the North Sea, the lines from marine renewable energy plants will be connected to the cable, and this distribution system will be suitable to supply low-carbon electricity to oil and gas platforms. When the renew-able energy generation level in the UK decreases, it will be maintained by Norway’s hydropower plants. It is expected that the project will attract GBP 1 billion investment and other EU countries will be able to join it in the future to establish a unified Euro-pean power system.

Financial instruments for marine energy sector developmentThe UK Government has developed

the financial and legal mechanisms enabling the R&D companies operat-ing in the marine renewable energy sector to profitably develop and the in-vestors to not doubt the long-term government support and stability of the sector. The “green” Renewables Obligation Certificates (ROCs) are the main funding mechanism. They oblige all the licensed firms supplying electricity to customers to receive a certain portion of this energy (up to

15.4% in 2015–16) from renewable energy sources. If there are problems with execution of commitments, the suppliers may buy the “green” certifi-cates that cover the missing amount of electricity at market prices or pay the purchase price at the government rate (over 50 GBP for each short-delivered MWh of renewable energy). Many small companies developing marine energy technologies have limited fi-nancial resources at the early stage. Promoting their projects from demon-stration prototypes to commercial use requires serious financial support. For this reason, in 2011, the DECC made it mandatory for suppliers to buy, along with the purchased amounts of energy, a corresponding number of certifi-cates — 2 ROCs for each MWh from wave renewable energy plants and tidal current power plants in England, Wales and Northern Ireland, 3 ROCs/MWh in Scotland for electricity from renewable current energy plants, and 5 ROCs/MWh from wave renew-able energy plants. Since April 2013, already 5 ROCs/MWh have to be purchased in all the UK areas for elec-tricity generated by renewable marine current and wave energy plants.

Such government support gives in-vestors confidence in raising revenues from the first commercial projects and that the dynamic development of the marine energy market in the medium term is real. For comparison, small hy-dropower sector gets government sup-port at the level of mere 1 ROC/MWh.

Oyster wave energy plant on the stocks

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Moreover, the Government has es-tablished the preferential Feed-In-Tar-iff for selling electricity from renew-able energy sources, which also con-tributes to the confident development of small renewable power generation, including the marine sector. Fixed feed-in tariffs are widely used also in other European countries — for exam-ple, in wind power generation in Ger-many, Spain and Denmark. The grid operators receive a fixed payment for each kilowatt-hour of electricity sup-plied from renewable energy sources. The tariff charge is offset by the budget or the final electricity consumer. The levels of feed-in tariffs are calculated based on the cost of generating elec-tricity by ocean energy converters and are occasionally decrease in line with the actual market price. The main ad-vantage of such tariffs is the simplicity and the possibility to provide long-term stability in the market. Moreover, the grid companies have no right to refuse to receive energy generated by renewable sources. The feed-in tariffs provide the companies and consumers with financial incentives in the form of lower bills or incentive payments for the use of energy from renewable energy sources.

Benefits, charges and other meas-ures contribute to the development of a new marine sector of the economy in the country — and ultimately to the state budget replenishment through the emerging tax sources, the devel-opment of small and medium-sized businesses, saving valuable natural resources (oil, gas, etc.). The develop-ment of the marine power sector in the initial stage is unattractive to in-vestors without government support. However, if the state guarantees the producer (owner) payment of an extra charge for electricity supplied to the consumer from new marine power plants, investments in the marine wind, wave and tidal energy sector under development inevitably begin to grow — and, hence, the number and capacity of marine power plants in-crease. At a certain point, given the reasonable financial incentive lev-els, the budget revenues overlap the charge costs and other governmental measures, and then a steady return of funds spent by the state on the devel-

opment of the sector begins.Studies carried out by Renewa-

bleUK showed that each budget GBP invested in the marine power sector has provided 6 GBP of pri-vate investment. Despite the general economic crisis in Europe, the finan-cial measures for marine renewable energy plants taken by the Govern-ment helped retain the existing ma-jor investors and attract new ones. For example, in 2011–12 the Siemens Concern increased its stake in MCT from 10% to 90% to develop the Sea-Gen technology. In turn, the Alstom Corporation acquired a 40% stake in Edinburgh-based AWS Ocean Energy, specializing in the development of wave power plants, while the An-dritz Group increased its stake in Andritz Hydro Hammerfest from 33.3% to 55.4%. These investments in the marine current power generation supplemented the already existing in-vestments made by the Rolls Royce Corporation. Before that time, in 2010, the ABB Concern invested GBP 8 mil-lion in Aquamarine Power, the devel-oper of tidal current energy plants. The Barclays Capital Corporation in-vested more than GBP 3 million in the same company and the largest bank Morgan Stanley acquired a 45% stake in the Atlantis Resources Cor-poration, the designer of the 1-MW Atlantis current energy plant. The E.ON Holding continues to finance the commercial tests of the Pelamis wave energy plant at the EMEC testing range.

Confidence in the marine energy market development allows the UK to predict the cost of energy generated by offshore wind plants at 100 GBP/MWh (5 rubles/kWh) and by marine wave and current energy plants at 162–340 GBP/MWh (8–17 rubles/kWh) by 2020. This difference is explained by different costs for some technological solutions, plant deployment scale and possible technology risks.

Nevertheless, there are also “pes-simistic” assessments. Some experts, with an eye to the economic crisis, predict growth in the capacity level of wave and current energy power generation that will be achieved by this time only at up to 300 MW (about 0.9 billion kilowatt-hours) in contrast

to 1.6 GW announced by Scotland. At the same time, most experts be-lieve that the planned maximum level will be even surpassed thanks to a balanced public policy. There are es-timates that the level of marine pow-er in the country will grow to 4 GW by 2025 and to 27 GW by 2050.

continuity and transfer of experience in developing the marine renewable power sectorTo date, British renewable energy

source developers and the appropri-ate servicing companies have prepared themselves worthily to work in a harsh marine environment, through the active use of advanced offshore oil and gas in-dustry technologies and extensive expe-rience in this field. Several ports — off-shore wind power plant service centers have emerged in the UK simultaneously. The Government has funded about GBP 60 million for their moderniza-tion and infrastructure development in the interests of the entire offshore re-newable energy sector — wind, wave and current power generation.

commercial offshore energy projects in other countriesThe scope of this article does not

allow a full-scale economic review of marine energy sector in other coun-tries. One can only note that, similar to the UK, commercial offshore wind energy projects are being actively pro-moted with government support in the U. S., Germany, Spain, France, the Netherlands, Norway, Sweden, Den-mark, and the wave and tidal current energy projects — in the U. S., France, Norway, Portugal, Canada, Australia, India, Korea and many other coun-tries. Some of these projects were cov-ered in several 2012 issues of USC’s corporate magazine. In recent years, China has been showing an ever-grow-ing interest in marine energy genera-tion. For example, there are plans to build the world’s largest offshore wind farm with capacity of 1,000 MW in Bohai Bay. With the support of Brit-ish experts, Shanghai will soon host Oceanology International 2013, one of the most prestigious international conferences and exhibitions with a large ocean energy section.

USC №3(16), 2013 43

economics of deep marine shelf and open-ocean power generationIn the spring of 2012, at a meeting of

energy ministers of 23 countries held in London, the United Kingdom and the United States signed an agreement on cooperation in the development of off-shore wind technology in waters with depths of over 60 meters. It should be said that such areas are very attractive due to high wind speeds, but are inac-cessible for conventional marine tur-bines and require the development of floating wind power plants. It is planned to reduce the energy costs of commer-cial floating wind turbines through a reduction in seabed preparation costs and the possibility of equipment assem-bly, adjustment and repair in the coastal environment.

The UK Government has recently allocated GBP 25 million to the Energy Technology Institute (ETI) to develop a testbed of a floating wind-driven power plant with capacity up to 7 MW. In the U. S., several companies simul-taneously have started developing four similar projects funded by the US De-partment of Energy (DOE). High-pow-er floating ocean wind-driven plants are actively being developed in France (see USC magazine, No. 4, 2012), as well as Norway, Portugal, Germany and other countries.

Mature technology of commer-cial floating wind, wave and current power plants can be successfully used both on the deep marine shelf and in the open ocean. However, as the distance from the shore increases, the problem of energy transmission along the cable arises. Therefore, it is more economically expedient to use

or accumulate energy and processing products directly in the area where the power plant is located. In this case, the renewable ocean thermal energy becomes most promising both eco-nomically and in terms of available resources. In the previous issues of the magazine, we reviewed in detail the development and features of Ocean Thermal Energy Conversion (OTEC) technologies and related Deep Ocean Water Application (DOWA) technolo-gies, as well as the key demonstration and pre-commercial projects in the U. S., France and Japan in this field. We outlined the huge economic prospects for OTEC in production versatility (production of ammonia, hydrogen, methane, ethanol, fertilizers, bio-fuel, fresh water, etc), Sea Water Air Condi-tion (SWAC), development of agricul-ture and mariculture, thermal energy of ocean hydrothermal vents and ocean thermal energy at high latitudes (AOTEC). The opportunity to receive huge revenues from the global market penetration of all these technologies and projects causes a lot of interest in them in economic terms.

All of the above takes on particu-lar significance after the signing of an agreement between the Lockheed Martin Concern and Reignwood, a company based in Beijing, held in April 2013 with the participation of the U. S. Secretary, to build the world’s first floating commercial OTEC plant with capacity of 10 MW in the South China Sea, near Hainan Island, by 2017. The project is evaluated at few hundred million dollars. We have pre-

viously noted that Lockheed has been steadily developing OTES technolo-gies over 40 years — primarily, for building depot ships for the U. S. Navy, and recently also for commercial pro-grams. It is easy to understand that the gradual accumulation of knowledge in the subject area, combined with in-house high technologies in aerospace, shipbuilding and other fields, will im-mediately turn into the quality of multi-production OTEC systems de-ployed in many parts of the world as soon as it is needed.

At present, the economics of re-newable offshore and open-ocean thermal energy generation is becom-ing relevant for Russia, too, in con-nection with the efforts to explore and produce sulfide ores in the areas of the tropical part of the Atlantic Ocean al-located to us that began in 2012. The polymetallic ore reserves in the oceans are huge, but the economic success of their exploration and production is hampered by lack of necessary deep-water technology, which is primar-ily determined by the energy supply problems. Another major problem was identified in 2012 by the Russian Foreign Minister. He said that Russia has no plans to build its naval bases, but it needs logistics support centers for replenishment, crew rest and ship repair abroad, particularly in Cuba, to perform its missions in the oceans.

economics of ocean micropower generationIssue No. 3, 2012 of USC’s magazine

described the “ocean micropower” con-

Conceptual design of the world’s first commercial floating OTeC plant off China coast

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cept proposed by the Shirshov Institute of Oceanology, RAS, which provides for power supply of self-contained long-term oceanographic research means using renewable ocean energy, and an autonomous ocean sampling network (AOSN) developed on its basis. A geo-environmental monitoring system, de-veloped by the Institute of Oceanology as part of the most important program “Geo-environmental monitoring of sea areas involved in oil & gas industry development,” could be one of the im-plementation options for the AOSN. In this regard, a RosHydroMet’s (RF Hydrometeorology and Environmental Monitoring Agency’s) development ef-fort on a unified distributed ocean data system (ESIMO) is also of interest.

The system relies on prediction (early warning) of an undesirable situ-ation, rather than on responding to the already existing circumstances. This requires continuous observation ac-tivities in time based on the thought-ful distribution of measuring means in space, as well as the development of a unified mathematical model reflect-ing the behavior of the geological, hydrological, biological and produc-tion processes interacting with each other. Necessary data need to come quickly in real time. The mathematical models being developed as the basis of the system should take into account a large number of influencing factors in the interplay between them.

The full-scale use of such a moni-toring system can provide a significant economic effect. However, its practi-cal implementation, according to the developers themselves, involves a number of constraints due to the char-acteristics of the currently available oceanographic research equipment. Long-term use of research vessels and the deployment of long cable networks involve considerable costs, fixed buoys and bottom stations have a limited power supply period and, therefore, require frequent costly op-erations for their removal and instal-lation. Significant difficulties occur also with providing continuous data transmission in real time. All of these obstacles can be overcome through the use of the of renewable ocean mi-cropower (AOSN) concept. This will address two most critical economic

problems at once — a significant en-hancement of the data received and a considerable reduction in the cost to acquire it. It should be noted that such detailed economic studies of these ocean-related issues have not yet been carried out despite their relevance.

A high quality of research stems from the fact that the unlimited re-newable ocean energy, combined with the latest advances in measuring tech-nology, microelectronics, communica-tions and software, makes it possible to develop unique marine equipment and completely automate observation, data collection and processing activi-ties. This will give the possibility to:

> Receive continuous, long-term, inter-related data sets both from the water column and the ocean bottom;

> Transmit the information to the Center (e. g., ESIMO) by sonar and satellite links in real time;

> Provide remote control of re-search means from the shore or a vessel;

> Modify research programs (mis-sions) directly in the ocean;

> Change the number and order of interaction between research means among themselves;

> Carry out complex, area and volu-metric observations;

> Establish the observation and re-search networks in local, regional and global scales, etc.

The integration of the AOSN into major international programs such as the GOOS and others is possible. In turn, owing to the large volume and high quality of such information, it is possible to timely use it in the cor-responding mathematical models and generate the accurate estimates and forecasts of meteorological, hydrologi-cal, geological, seismic, technological, environmental and other processes. The economic effect of all these meas-ures is difficult to estimate in figures, but the main thing is certain: an ac-curate weather forecast, the possibility of warning climate and environmental disasters, tsunamis, earthquakes en-tailing the destruction of industrial equipment, platforms, pipelines, etc., can save lives and health and prevent multibillion dollar losses.

To illustrate the economic effect ex-pressed in the reduced oceanographic research costs when using measuring devices based on renewable “ocean micropower,” let’s consider a real dem-onstration journey of the Wave Glider automatic robotic ocean-going plat-forms that use wave energy for their propulsion and the solar energy to energize its equipment. In 2012, under the PACX program sponsored by BP, Virgin Oceanic and other companies, four Liquid Robotics’ wave gliders launched from San Francisco travelled together in autonomous mode to Ha-waii, and then the two of them headed across the Pacific Ocean to Japan and two to Australia. In this case, extensive oceanographic information came from all the gliders continuously to the In-ternet with an interval of 10 min-utes in real time and was available on the Google Earth site to all research-ers throughout the world. Each of the gliders measured meteorological data, waves, currents, air and water temperature, salinity, fluorescence, dissolved oxygen and chlorophyll content, acoustic behavior of marine mammals and fish, etc. The journey from Hawaii took more than 300 days, the autonomous underwater vehicles (AUVs) travelled together more than 34,000 nautical miles and transmitted more than 2.2 million high-resolution sensor readings.

Let’s assess hypothetically the cost of such an expedition on board, for example, the famous research vessel Akademik Keldysh taking into account only the fuel costs. Even assuming that the research vessel could collect and transmit in real time data similar to those obtained by the Wave Glid-ers (in the same amount and with the same quality), then at the economical speed of the vessel (10 knots) the costs for the California-Hawaii journey alone would be US$ 240,000, consid-ering the cost of diesel fuel (about US$ 1,000 per ton) and its consump-tion rate (24 tons per day). The whole route, similar to that travelled by one of the gliders — Papa Mau — from Hawaii to Australia (9000 miles), would require another US$ 900,000. If the entire scope of research were com-pleted not by four gliders that moved each along its route, but just two ves-

USC №3(16), 2013 45

sels (they would initially go from San Francisco to Hawaii and then separate and one would go Japan and the other to Australia), the total fuel costs alone would be about US$ 2.3 million. In addition, a few hundred stops (sta-tions) would have to be made on route of such a hypothetical expedition for data collection, which, with fuel con-sumption at a station of about 8 tons a day, would inevitably lead to an addi-tional increase in the expedition time and overall costs. On the contrary, ro-botic gliders require no fuel expenses.

The above comparison is made only with respect to a hypothetical expedi-tion, but dozens of such expeditions should be conducted throughout a year for continuous ocean monitoring. We can also compare the development cost of an AUV (about US$ 150,000–500,000) and the construction cost of the same Akademik Keldysh (US$ 20 million in 1984) or the Japanese manned submersible Shinkai 6000 (US$ 90 million in 1981). In addition, it is interesting to compare the life-cy-cle cost of an AUV and a research ves-sel, for example over a 35-year period. To this end, we should take into account the cost of using the vessel for its intended purpose, port dock-age, scheduled and current repairs, supplies, wages and food for the crew and research staff. In short, the total life cycle cost of a research vessel may greatly exceed its construction cost. We should also bear in mind that today a research vessel spends about 40% of the annual time in port — with the fuel consumption of about 5 tons per day, the total cost for this item alone will be about US$ 25 million. Whereas for an AUV, the total cost of storage, repair, maintenance, deploy-ment in the ocean, remote control of vehicle missions doesn’t exceed a few hundred thousand dollars over the entire life cycle. At the same time, it can perform a variety of pre-set research and observation missions almost continuously and without time limits. Moreover, each Wave Glider leased to the consumer can also earn about US$ 3,000 a day and will bring about US$ 30 million over the whole service life.

The gliders have proved their excep-tional reliability and endurance: they

are able to travel thousands of miles without a stop, sometimes in very harsh conditions, with the waves of 7 m in height and wind speed of above 50 knots. Already today these vehicles are involved in a number of important projects in the area ranging from Aus-tralia to Alaska.

Developers offer some basic ver-sions of such gliders differing in sensor and equipment configuration — for oceanographic and meteorological ob-servations, data relay, environmental studies, observation for defense needs, etc. Their operation provides the or-ders in various areas of activities, in-cluding oil and gas industry, open-sea wind energy platform development, shipbuilding industry, fishing industry, military missions, national security and communications programs, seis-mic situation monitoring, etc. NOAA experts state that the use of such AUVs based on the use of solar, ther-mal and wave energy creates a new research and economic paradigm for oceanographic observations without the use of expensive research vessels for implementing similar missions.

However, it should be emphasized that the above comparative analy-sis is intended only to show high eco-nomic efficiency of AUVs based on renewable energy sources. It in no case downgrades the value of research ves-sels and manned underwater sub-mersibles and the need for expedition

research conducted by them. In this sense, it is necessary to drastically im-prove the overall level of data collec-tion automation by introducing AOSN elements and direct the funds saved or earned through this for rational expedi-tion programs. It is also important that the implementation of AOSN will not require such a significant investment as both existing and planned cable systems do. Its basic equipment components, including AUVs with energy converters, can be made of common replaceable modules. This approach will enable the easy and cheap installation of AOSN in a given water area and also their easy removal for deployment in a new area of the ocean. Thus, the likely revenues and cost savings from the use of AOSN can far exceed the development and production cost of its constituent means based on “ocean micropower.” The resulting high level of automation will provide real energy savings and in-creased energy efficiency of the shelf and the ocean observation, monitoring and research.

economics of the shelf and the ocean energy in russiaRussia is washed by thirteen

seas, its maritime border stretches for 40,000 km, while the economic zone border is 370 km off the coast and islands. The total ocean energy reserves in the country are huge. For example, the wave energy density for the Black Sea is 8 kW/m, Caspian Sea — 11, Barents Sea — 29, Baltic Sea — 8, and the Sea of Okhotsk — 30. The speed of currents in the Sea of Okhotsk reaches 2.5 m/s, strong currents are observed in a number of places off the coast of the Barents Sea, Sakhalin and Kamchatka. The cur-rents achieve highest speeds — up to 4 m/s — in the throat of the White Sea

WaveGlider robotic ocean vehicle using wave and solar power

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and in 26 straits between the Kuril Is-lands. The largest wind resources in Russia are concentrated on the coasts and in the waters of the northern and eastern seas, especially in the ice and on the Arctic islands.

Despite this, 70% of the Russian territory is supplied with electric-ity generated by autonomous power plants running on expensive imported fuel. Vast areas of the country, mainly on the northern and eastern coasts, do not receive electricity at all. Because of the northern delivery problems, the energy cost, with account for fuel delivery cost, in many regions of the country (including coastal and island areas), which are cut off from the cen-tralized power grids, is very high and reaches 25–100 ruble/kWh.

This situation confirms the poten-tial competitiveness of marine renew-able energy plants. The use of wind farms with capacity of 100–200 MW deployed on the floating and ice-re-sistant platforms in the Arctic and Far Eastern seas, where the wind speeds are very high, looks especially prom-ising. Lower-capacity floating wind farms can be deployed in the Baltic, Black and Caspian Seas. The instal-lation of free-flowing tidal current energy converters with a unit capacity of up to 2 MW, including also under the ice on the shelf of some seas, is also possible. Floating wave power farms with a capacity of a few mega-watts can be used in ice-free water areas of all the seas. However, the development and manufacture of AO-TEC plants may be the most interest-ing proposal. These power plants use a temperatures difference between the relatively warm water located under the ice and frosty outside air, whose temperature in the winter months can reach about 50 degrees Celsius.

Work in this area began back in So-viet era. In the 1990s, it was stopped, but the solid groundwork has re-mained and can be used today. Arctic OTEC plants differ from their tropical counterparts by the seasonal nature of operation. During the summer, it is necessary to switch to other energy sources, such as wind turbines or die-sel power plants.

For the Arctic shelf, it is necessary to resume the development of both

direct-action low-capacity energy converters and medium- and high-capacity turbine-generator units. The significance of the formidable tasks to develop oil and gas fields in the Bar-ents, Pechora, Kara Seas and the Sea of Okhotsk facing Gazprom and Ros-neft gives reason to hope that these companies will be the first among Russian companies to be interested in ocean power generation development.

At the initial stage, it is advisable to carry out the feasibility studies for the following innovative marine energy projects.

1. “The system of long-term geo-environmental monitoring and ob-servation of the surface, underwater and under-ice conditions in the areas where oil and gas drilling platforms are placed on the Arctic shelf ” in ac-cordance with the “Automated ocean-ographic research system based on renewable ocean energy” concept. The results can be used to ensure the RF maritime border protection, Northern Sea Route development, RF Ministry for Emergencies and Navy tasks, in Antarctica, and for other special pur-poses.

2. “Fuel energy saving principles` in the operation of drilling platforms and associated infrastructure on the shelf of the Arctic and the Far East through the use of clean, renewable ocean en-ergy.” According to some estimates, about 400 MW of power should be required in the next few years in the Barents Sea alone to support under-water hydrocarbon production. The results can be in demand in the North-ern Sea Route and the Russian Ant-arctic Expedition (RAE) infrastructure development.

3. “Principles for power supply of deep-water sulfide ore and nodule exploration and mining equipment on the basis of thermal and other kinds of renewable ocean energy.”

4. “Principles for supply of autono-mous floating logistics support centers for RF ships and vessels with energy, seafood and fresh water on the basis of thermal and other kinds of renewable ocean energy.”

5. “Principles for hydrogen and motor fuel production on the basis of thermal and other kinds of renewable ocean energy.”

Implementation of these projects is critical both economically and in terms of geopolitics and strengthening ties with foreign, especially develop-ing, countries.

Ocean power technology develop-ment efforts should be conducted using the vast experience of offshore oil and gas production technologies. Analysis of foreign achievements pro-vided in the previous issues of USC’s magazine demonstrates the obvi-ous viability of using renewable ocean energy as an innovative promising area, applicable both for civilian and defense programs, including as part of the “Ocean Development” technologi-cal platform.

This area of commercial shipbuild-ing, in case of its joint development by Gazprom, Rosneft and USC, could be quite profitable and could also considerably increase the level of em-ployment in the industrial sector. We still have good scientific and techni-cal capabilities in this area that have remained from Soviet times and there are skilled specialists and huge pro-duction capacity in the country.

Russia’s entry into the world ocean energy market is feasible only with the organizational and financial support of this area from the State and leading domestic corporations. It is necessary to develop a state program involving the potentially interested federal ex-ecutive authorities — Ministry of Eco-nomic Development, Ministry of En-ergy, Ministry of Industry and Trade, Hydrometeorology and Environmental Monitoring Agency (RosHydroMet), Ministry of Natural Resources, Federal Agency on Subsoil Usage (Rosnedra), Fishery Agency, Ministry for Emergen-cies, Ministry of Defense, Ministry of Foreign Affairs, Ministry of Finance — jointly with the Russian Academy of Sciences. To develop and implement the projects, it is necessary to set up the interagency Ocean Energy Fund and the Ocean Energy Coordination & Engineering Center. All of this will make it possible to take another real step towards Russia’s transition to an innovative economy. At a recent meeting on the alternative energy de-velopment problems the Prime Minis-ter spoke with his deputies about the need to develop such economy.

USC №3(16), 2013 47

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48 USC №3(16), 2013

D.A.Gagonin

eep sea research and explora-tion using manned submersi-bles began in the country in 1923, when the first domestic manned bathysphere (hy-

drostat) was built to mechanical en-gineer Eugeny G. Danilenko’s design. Only one such submersible made to a design of the American engineer Hans Hartman was available in the world at the time. Therefore, Russia can rightly be considered a pioneer in the sys-tematic exploration of the underwater world. The Danilenko-designed bathy-sphere carried out  its first dive on Sep-tember 2, 1923. Its crew included the designer himself and D. A. Karpovich and they became the first Russian hy-dronauts. On September 9, 1923, the

On September 2, 2013, domestic hydronautics turns 90. Developing and operating a serviceable submersible is a challenging scientific, engineering and organizational task. Only a few industrialized countries are capable of developing such equipment. russia is the absolute world leader in this area today: we have built the largest number of underwater vehicles to the largest number of designs. Since 1923 to date, our country has developed, manufactured and ordered in other countries around 200 submersibles and technical means of various types and purposes to approximately 50 projects. Some of them are unmatched in the world. Most of the vehicles were designed and built at enterprises and organizations affiliated with the United Shipbuilding corporation. Only highly skilled professionals are able to operate such equipment at great depth.

HerOeS OF eXTreMe

DePTHSDomestic hydronautics, an industry

engaged in deep water research and exploration using manned

submersibles, marks its glorious anniversary

D

Descent of DSV Mir from the research vessel Akademik Mstislav Keldysh

“We can all be proud that we have such equipment and such experts of the highest level ...”

(Excerpt from an interview with Vladimir Putin after his dive on board

the deep-sea submersible Mir-1to a depth of 1,395 meters

in Lake Baikal, August 1, 2009)

USC №3(16), 2013 49

first national diving depth record of 123 meters was set.

Given operating experience with the Danilenko hydrostat, a lighter and easi-er maintainable hydrostat (bathysphere) by engineer Anatoly Z. Kaplanovsky was built in 1926.

After the war, the task of study-ing and exploring the seas and oceans gained particular importance in the Soviet Union. The country started to develop submersibles in different areas and for different departments.

In 1960, then modern hydrostat GG-57 Sever-1 was built at Baltic Ship-yard.

In 1961, Krasnoye Sormovo Plant constructed the world’s first autono-mous underwater rescue vehicle UPS (“controlled underwater apparatus” according to Soviet Navy classification) to a Lazurit Central Design Bureau’s project. The vehicle was intended to save the crews of emergency subma-rines and could take three rescued submariners on board. It became the first domestic autonomous under-water vehicle. In 1962, the UPS res-cue vehicle undocked from a Project 666 carrier submarine, docked with a conditional emergency submarine, then people went to the vehicle and the lat-

ter returned to the carrier for the first time in world practice.

In 1963, the tethered towed under-water vehicle Atlant-1 intended primar-ily for trawl surveillance was made.

In the mid-1960s, a special unit was established in the Soviet Ministry of Defense for ocean exploration and de-velopment for defense purposes (now the RF MoD Main Directorate for Deep Sea Research.) A unique and world’s

unrivalled Archipelag deep-sea complex was built for it that consisted of a con-verted Project 611 carrier submarine and a tethered towed deep-sea vehicle capable of independently maneuvering within the slack of its cable-rope at a depth of around 3000 meters using its own engines. Relying on the Archi-pelag’s test results, an improved deep-sea complex, the Seliger, was developed.

In 1970, the first full-fledged domes-

Descent of DSV Sever-2 from with the research vessel Odysseyrescue underwater vehicle UPS

rescue underwater vehicle UPS on board the Project 666 carrier submarine

Hydrostat Sever-1

Hydrostat (bathysphere) by e.G. Danilenko

Hydrostat by e.G. Danilenko (drawing)

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50 USC №3(16), 2013

tic autonomous deep-sea submersible for scientific research, the Sever-2, with a diving depth of 2000 meters was built at Admiralty Shipyards on order from the Ministry of Fisheries. Its conceptual design was carried out by the Giproryb-flot institute followed by detailed design performed by the Malakhit SPMBM). On March 28, 1971, it was the first in the country to reach a depth of 2,020 meters. With the commissioning of the Sever-2 vehicle and its twin Sev-er-2bis built in 1976, regular research in all areas of the oceans at depths of up to 2000 meters became common practice for our scientists.

Based on the trial operation results for a rescue complex, consisting of the submersible UPS and Project 666 car-rier submarine, Soviet scientists de-veloped the Project 1837 autonomous rescue vehicle (“rescue underwater ap-paratus (SPS)) according to Soviet Navy classification). It could take already 16–20 rescued submariners on board and was much more convenient and efficient in operation. In 1971, the Navy commissioned the Project 1837 ve-hicle, which was launched in series production. Later, a more advanced Project 1837K vehicle emerged and became part of a unique underwater

The profession of hydronaut has much in common with the profession of astronaut, but has some fundamental differences. It is no wonder that the American astronaut Scott Carpenter, who worked in the underwater laboratory Sealab II for about a month and partially experienced the dangers that lie in wait for those who have embarked on a difficult path of conquering the ocean, said the bosom of the sea is more hostile to man than space.

A spacecraft flies in vacuum, whereas a deep-sea submers-ible is exposed to the pressure of hundreds of atmospheres. A large number of sea wa-ter inlets (tens of current leads, windows, and also the most dangerous holes through which the shafts of a mecha-nism performing not only translation, but also rotational movement run) substantially weaken its strength.In the event of a spacecraft pressure failure, the astro-nauts have space suits giving them the opportunity to be a certain time in vacuum. By contrast, even a slight leak-age in a deep-sea vehicle be-ing at great depth immediately

creates the most severe ex-treme situation, since there is no personal rescue means in the world capable of saving a person who is exposed to high pressure.Due to the limited weight and dimensions of a deep-sea ve-hicle, it is impossible to devel-op the collective crew rescue means similar to pop-up res-cue chambers used on board modern nuclear submarines. In other words, there is practi-cally no escape equipment in deep-sea vehicles.A spacecraft continuously maintains radio and TV com-munications with ground control stations, its flight is controlled around the clock

the Mission Control Center. When in emergency, astro-nauts will almost always get help in the form of a skilled advice or recommendation from leading experts and designers. In extreme cases, another spacecraft can be sent to space to render aid and rescue the crew of astronauts. The feeling that the whole country watches the astronaut with dismay and sympathy gives him great moral support.A deep-sea complex or vehicle, going to the ocean for thou-sands of miles from the home base, does not have continuous communications with the shore. Hydronauts are often even un-able to quickly report an acci-

dent and find themselves face to face with the ocean piercing the pressure hull.The seabed contour is compa-rable to the Earth’s surface: the same flat areas, but also the same mountain ridges, canyons, precipices, rift zones with rock heaps and rubbles, turbidity currents, when tens of tons of silt move along a slope in the darkness and silence like snow avalanches, sweeping away everything in their path.It is obvious that operation of deep-sea vehicles at great depths in a little-studied and hostile environment inevita-bly involves some risk. It is almost impossible to help the crew of an emergency deep-sea submersible.

Hero of the Soviet Union, hydronaut-researcher,

Captain 1st Rank Yu. S. Kovalenko

Project 1837 rescue underwater vehicle Project 1837K rescue underwater vehicles on board Project 940 carrier submarine

DSV Seliger

Submersible Atlant-1

USC №3(16), 2013 51

rescue complex that consisted of two Project 1837 rescue submersibles and a Project 940 Lenok carrier submarine. Almost simultaneously with the SPS, in 1971 the Navy’s Rescue Service adopted the Project 1839 autonomous under-water vehicle (“autonomous working apparatus” (ARS) according to Soviet Navy classification), designed to assist in rescuing the person-nel of sunken submarines and performing a variety of un-derwater and technical work. It proved to be very success-ful and remained the Navy’s workhorse for many years. Later, a sub-stantially improved Project 18392 sub-mersible was developed. Two vehicles of the 1839–18392 family, the AS-10 (Delfin) and Bravo, were extensively used for research in the interests of the

USSR Academy of Sciences and the Acad. Krylov Central Research Insti-tute.

In the 1970s, the Ministry of Fish-eries was the frequent customer of submersibles. In 1972, in elaboration of the Atlant-1 towed un-derwater vehicle project, its improved version, the Tethys, with a diving depth of up to 330 meters was built on its order. Later, a fairly large series of such vehicles was put in service, including more advanced versions like the

Tethys-N. In 1973, there emerged the Tinro-2 underwater vehicle with a div-ing depth of 400 m and, one and a half years later — its twin, the Tinro-2bis. Both the vehicles were successfully and intensively used and carried out

several hundreds of dives in almost all areas of the Oceans of the World. In 1976 and 1983, the Benthos-300 and Benthos-2 unique underwater laboratories were commissioned: they were intended to conduct long-term biological observations and enabled frogmen/researchers to exit in sub-merged position. All of these vehicles were designed by the Soviet Ministry of Fisheries’ Giprorybflot Design Institute up to the preliminary design stages and then transferred to specialized deep-sea vehicle design bureaus for detailed design — Gorky-based Lazurit CDB and Leningrad-based Malakhit SPMBM — and built at Admiralty Shipyards, the oldest famous shipyard. However, because the above enterpris-es were overloaded with vital defense orders, in 1970 the Ministry of Fisher-ies established its own Experimental Design Bureau for Special Equipment

Project 1839 underwater vehicle

Submersibles Tethys-N, rif, and Langust

Descent of the submersible Tinro-2 from the research vessel Gidronavt

Underwater laboratory Benthos -300

russia is the absolute world leader in the quantity and quality of deep-sea submersibles built

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52 USC №3(16), 2013

(OKB STS). Between 1976 and 1989, the Bureau had developed a line of successful compact and multifunc-tion submersibles — the OSA-3–600, Omar, Langust, Rif, Morzh, APKH, Okeanolog, and Katran.

In 1973–1989, Admiralty Shipyards built a series of four Poisk-2-class large deep-sea submersibles to a Malakhit design for the Navy with a diving depth of 2000 meters and an extensive array of equipment for research and un-derwater work. Also in 1983, the first domestic deep-sea bathyscaphe, the Poisk-6, which included a float chamber filled with gasoline for buoyancy, was constructed. On August 19, 1985, the Poisk-6 reached a depth of 6015 meters for the first time in Russia. This record was the result of years of efforts under-taken by Malakhit’s designers, Admiral-ty Shipyards’ shipbuilders and a number of related enterprises, thus marking an-other breakthrough of national science and technology and a new milestone

for domestic hydronautics. It should be noted that a total of four deep-sea bathyscaphe-type submersibles have been built in the world — the world-renowned French FNRS-3 and Archi-mede, Swiss-American Trieste, which conquered the Mariana Trench in 1960, and our Poisk-6.

The Shirshov Institute of Oceanology (part of the Academy of Sciences of the USSR), one of the country’s leading or-ganizations engaged in ocean research and exploration, too, did not stay aback from underwater research. A very suc-cessful submersible, the Argus, was de-signed for the Institute by RAS’ Experi-mental Design Bureau of Oceanograph-ic Equipment and built in 1976. In 1975, the Institute purchased two Pisces-class deep submergence vehicles with a div-ing depth of 2000 meters in Canada. They were used during numerous sci-entific expeditions and contributed to multiple scientific discoveries. In 1985, two Mir-class submersibles with a div-ing depth of 6000 meters, designed by Russian design organizations under the general guidance of the Institute of Oceanology’s Professor I. E. Mikhaltsev,

were ordered in Finland. In December 1987, the vehicle Mir-1 under com-mand of Professor A. M. Sagalevich reached a depth of 6170 meters thus setting another national hydronautic record. A deep-sea complex, consist-ing of the research carrier vessel Aka-demik Mstislav Keldysh and deep-sea manned submersibles Mir-1 and Mir-2, has become the world famous brand of Russian hydronautics and a model for developers of similar deep-sea equip-ment. A lot of bright and interesting expeditions across the oceans of the world have been made on board the Mir-class vehicles.

In 1985, the Institute of Oceanol-ogy independently built the first domes-tic submersible Osmotr that enabled the divers to exit at a depth of up to 200 meters and work by “long-stay” method.

Throughout the 1980s, the Lazurit CDB and Krasnoye Sormovo Plant con-tinued to build new rescue equipment. In 1986–1989, new generation Project 1855 Priz rescue vessels were commis-sioned by Navy’s Rescue Service. They have a titanium hull and provide rescue of the crews of emergency submarines at depths up to 1000m. In our century, these submersibles have been refur-bished. Today, all of them are opera-tional with Navy’s Rescue Service.

DSV Poisk-2

DSV Poisk-6

DSV Piesces -11

Descent of the underwater vehicle Okeanolog from the rescue ship Georgy Kozmin

In 1983, admiralty Shipyards built the first domestic deep-sea bathyscaphe, the Poisk-6, which included a float chamber filled with gasoline for buoyancy. On august 19, 1985, the Poisk-6 reached a depth of 6015 meters for the first time in russia

Underwater vehicle Argus

USC №3(16), 2013 53

Sometimes, because the design or-ganizations and shipyards were over-loaded with defense orders, the neces-sary equipment was ordered abroad. Nowadays many, referring to such examples, are trying to prove the back-wardness of the domestic industry. This opinion is misleading.

In the mid-1960s, the Government decided to establish a fundamentally new type of underwater equipment — deep-sea vehicles offering extended au-tonomy and enhanced capabilities. This challenging scientific, engineering and organizational problem was success-fully met through the joint efforts of Malakhit’s designers, Admiralty Ship-yards’ shipbuilders and related enter-prises. In the late 1980s, unique world’s unmatched nuclear-powered deep-sea stations (except for a simpler NR-1 vehicle now decommissioned from the U. S. Navy) entered service with the Soviet Ministry of Defense. A total of three Project 1910 stations and the same number of Project 1851 submersi-bles had been built between 1986 and 1995. These deep-submergence vehicles

are a unique achievement of the domes-tic design school and shipbuilding in-dustry. The stations are currently in ser-vice with the RF Ministry of Defense’s Main Directorate for Deep Sea Re-search and invoke genuine pride among all concerned citizens of our country.

In the hard 1990s, despite all difficul-ties, work on deep-sea equipment did not stop. In 1990, Sevmash, the flagship of Russian submarine industry, built the first domestic underwater vehicle in-tended for tourist dives to Rubin CDB ME’s design. It received the name Nep-tun. Currently, its more advanced de-scendant, the Sadko, is in operation in Greece.

In 1994, the Project 18270 Bester next generation rescue underwater ve-hicle was built.

In 2000, the RF Navy commissioned the Project 16810 manned submers-ible Rus, the first full-fledged domestic 6000-meter-class deep-sea vehicle. On May 14, 2011, the Project 16811 sub-mersible Consul, its improved “twin brother”, reached a depth of 6270 me-ters, a new record diving depth for Rus-sian equipment and Russian people.

The year 2003 marked the launch-ing of a unique new generation Project 10831 deep-sea vehicle built at Sev-mash.

In 2005, Malakhit SPMBM, Baltic Shipyard and Acad. Krylov Central Shipbuilding Research Institute joined the efforts to build a modern deep-sea submersible with a diving depth of 7000 meters for a foreign customer. On June 27, 2012, it successfully reached a depth of 7026 meters.

At present, Admiralty Shipyards is completing the trials of a new gen-eration Project 18271 Bester-1 rescue submersible. In 2014, the vehicle will

Project 1855 submersible Priz

Submersible Osmotr

Submersible Neptun Project 1910 nuclear deep-water station

Project 1910 nuclear-powered deep-water station

On May 14, 2011, the DSV Konsul under command of captain 2nd rank Dmitry Boev set another dive depth record for russian equipment and russian people after reaching a depth of 6270 meters.

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54 USC №3(16), 2013

be commissioned with the RF Navy’s Rescue Service.

Today Russia has the world’s largest fleet of deep-sea submersibles with a diving depth of 6000 meters. These are the Rus, Consul, Mir-1 and Mir-2. Five deep-sea rescue vehicles and a fleet of unique deep-sea nuclear stations are also in service. It is worth noting that today only four states in the world — the U. S., France, Japan and China — have each one vehicle capable of diving to a depth of 6000–7000 meters. No country in the world has a research ves-sel with two 6000-meter-class vehicles on board, while we have two such ones — the research vessel Akademik Mstislav Keldysh with the submersi-bles Mir and the oceanographic re-search vessel Yantar with the vehicles Rus and Consul, which is undergoing fitting-out at Yantar Shipyard.

No country has carried out such large-scale deep-sea equipment de-velopment and deep-sea research programs. Russia is the absolute world leader in the quantity and quality of submersibles built. We have the biggest

number of highly trained hydronauts. A vast number of unique missions have been conducted. A lot of scientific dis-coveries have been made. The world’s unrivalled underwater operations have been carried out. An outstand-ing school of design, construction and operation of deepwater equipment of all types, as well as a hydronaut training school have been established. Thirty-five people were awarded the title of Hero of the Soviet Union and Russia for the development and operation of deep-sea equipment. The groundwork laid in the deep-sea technology area enables Russia to successfully master the wealth of the Arctic shelf and other seas in the 21st century, too. Our coun-try has unique technologies in the field of construction of deep-sea vehicles of titanium alloys, in the manufacture of small-sized nuclear power plants for deep-sea vehicles and in the production of the entire line of devices to success-fully accomplish tasks at great depths.

At present, the United Shipbuilding Corporation’s enterprises can offer cus-tomers the development of a wide range of deep-sea systems to solve any tasks.

The history of Russian underwater engineering and ocean development is national pride and heritage of Russia. In the 21st century, which is called the century of the oceans of the world, it is necessary to strengthen our country’s lead in ocean development, created by the efforts of our ancestors and contem-poraries, in every possible way. DSV rus

Descent of the DSV Konsul from the support vessel Zvezdochka

Project 18271 underwater rescue vehicle Bester-1

research vessel Akademik Mstislav Keldysh with on-board DSVs Mir-1 and Mir-2

The new generation Project 18271 Bester-1 rescue submersible will be commissioned with the rF Navy’s rescue Service in 2014.

USC №3(16), 2013 55

read the magazine regularly and think of it as a much needed publication help-ing expand the professional outlook. Each issue contains

spotlight interviews, interesting ana-lytical articles and informative histori-cal materials. Issue 2 (15) of 2013 was no exception.

I’d like share my views on the reads and say a few words and suggestions.The first thing you notice is the cover, the face of the magazine. I absolutely support the editorial board’s decision to place the most significant photos of ships and vessels built at Corpora-tion’s enterprises on it. A beautiful photo of modern ships is in this issue, too. However, I could find neither their names nor project numbers.The opening remarks by USC Presi-dent Vladimir Shmakov set the tone of the entire issue, focusing on the major topics.However, the collection of stories in the “News” section left me perplexed: the June issue describes the events that occurred in… April and May. That is, all this information could be read on the Internet and other pub-lications long before the magazine appeared. Don’t get me wrong, I’m not opposed to such collections, but I think it would be more reasonable to publish them in other column — for example, “USC’s significant events during the period …” As to the News section, I propose to place the an-nouncements of upcoming events, exhibitions, significant jubilees, an-niversaries there. This information

would be very topical by the release date of the magazine.The single material in the “News” section that caused my genuine in-terest was the interview with USC President Vladimir Shmakov. The USC strategy is one of the most pressing and urgent topics for Russian ship-building industry today. I think the topic should be continued and expand-ed on the pages of the magazine. Al-ternatively, it could be singled out in a separate section under which you can publish interviews with the officials of the Ministry of Industry and Trade, Krylov State Research Center, heads of USC departments in the main areas. And then it would be good to organize a roundtable together with the discus-sion of these publications. Continua-tion and development of one topic in different issues guarantees that the reader will wait for the next issue.I’d like to thank Igor Zakharov, USC Vice-President for Investment Management and FTP Implementa-tion. I have read his analytical article “Topically and Freshly” about USC’s participation in the LIMA 2013 Lang-kawi International Maritime and Aerospace Exhibition with keen inter-est. The coverage of the international exhibitions, not only shipbuilding ones, is to be continued. It’s no se-cret that the active integration of the latest developments in various in-dustries is under way. For example, today shipbuilding industry uses a number of components that were previously employed only in avia-tion and space industries. So, photos from MAKS 2013 Air Show would be

perhaps of interest to many USC specialists.That the magazine gives attention to the history of shipbuilding can-not but rejoice. We must know his-tory to evolve in the future. Many of the historical projects of the 20th century referred to in the magazine have not exhausted their potential and may be in demand today. I am sure that the chronicle of Malakhit SPMBM Design Bureau’s underwa-ter shipbuilding efforts described in “Looking into the future” is interest-ing to both veterans and young ship-builders. Personally, I felt a great

sense of pride: most of submarines and submersibles described in the article were built here, at Admiralty Shipyards.I was glad to read the report “Boiky went to the Baltic Sea.” This is exactly what’s needed today! It is necessary to more frequently talk about new ships, progress in their construction and their new capabilities. And the coverage should not be limited to in-formation from the ship designer or builder — it would be very interesting and useful to read how the ship has shown itself in service, find out how its commander and crew assess it.The cover story of the issue — Ten-dencies in Shipbuilding and the Navy Are Encouraging — has aroused the most positive emotions. Thanks to its author — Director of USC’s State De-fense Order Department and simply wonderful man Anatoly F. Shlemov — for his being! I saw a very correct, balanced estimate, an absolutely professional approach, a systematic and in-depth vision of the situation. I’d like the article be prophetic and have a real embodiment!And one more wish in the end of the “watch”.The magazine gives the floor mainly to officials. Of course, this is right and always interesting. But I think it makes sense to expand the age range — to give the floor to shipbuild-ers of different generations. Today’s youth perceives many things in a completely new way, and I’m sure its opinion will be useful for shaping the USC strategy and will also add agil-ity to the magazine and make it even more popular.

I

Today, chief engineer of JSc admiralty Shipyards Vladimir P. BaIKOV shares his opinion on the previous issue of the corporate magazine “USc. Building a Fleet of the Strong country” as well as his suggestions for topics and issues worth covering in the publication.

THe MIrrOr OF USc

ISSUe WATCH

56 USC №3(16), 2013

READ INSIDE:

HEROES OF EXTREME DEPTHSThe history of the manned submersibles in Russia

THE SHELF OBLIGESStrategy and tactics of oil and gas field development

№ 3 (16) 2013

HORIZONS OF CIVIL

SHIPBUILDING

FEATURE ONE: