Murmansk region – facts and opportunities: Gas, Oil, Minerals

Olga Buch, Director General, Arctic Center, Doctor of Economics, Professor,

Chairman of the advisory council of the Association "Murmanshelf"

20 March 2012, , Sweden

The Murmansk region

Is located on the Kola Peninsula beyond the Polar Circle

Forms the part of North-West Federal district

Square of the territory - 144,9 square meters

Extension from West to East is 550 km, from North to South - 440 km.

Population - 850,9 thousand people.

Population density - 5,9 pers. For 1 square metre

The Murmansk region Unique features • Long frontier with the EU • Ice-free port • Existence of Closed

Territorial Administrative Unit

Main Complexes • Mining industry • Fishing industry • Energy • Transport • Agro-industry • Tourism

The Murmansk region is the part of Barents Euro Arctic region (BEAR)

ТRANSPORT COMPLEX

Airport (Murmansk, Apatiti)

Federal road Asphalt covering Gravel road surface

Ground coating

---- Railway roads (trackage 870 km)

Sea ports

The Main – is the port of Murmansk, the starting point of transit along Northern Sea Route

Power Complex of Region includes: • 17 Hydro Power Stations • Murmansk Thermoelectric Power Station • Apatity Thermoelectric Power Station • Kola Nuclear Power Station

• Three Departmental Block- Power Stations

Power Complex Potential Annual Capacity of Power Stations exceeds 20 billion KWH

Mining and Metallurgical Complexes

Region in the all-Russian manufacture

JSC «Kovdorskiy GOK»

JSC «KOVDORSLUDA»

JSC «APATIT» CJSC «North-West

Phosphorous company»

JSC KOLA GMK «PECHENGANICKEL»

LLC «LOVOZERSKIYGOK»

JSC «OLKON»

Branch of JSC «SUAL» «KAZ-SUAL»

Apatite concentrate

Mica, niobium, tantalum

Nepheline, baddeleyite

Nickel

Ceramic raw materials

Cuprum

Iron-ore concentrate

Aluminum and electrical energy

100 %

80 -100 %

100 % 45 %

35 %

13 %

9 %

2 %

Each sixth ton of food fish production is produced on the enterprises of Murmansk

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Mineral-raw material basis of the Murmansk region

Characteristics of mineral-raw basis of the Murmansk region:

• High degree of geological and geophysical study and industrial reclamation;

• compact (bunch - forming) location of the sources of natural resources,

• Complex composition of mineral resources • Broad prospects for revealing new non-

traditional for the region natural resources.

The Region produces almost 100% of raw materials for production of rare-metal and rare-

earth products

The biggest field of rare and rare-earth metals -

Lovozerskoe

Reserves of materials for functioning enterprises of Mining and Metallurgic complex is from 25 to 100 years

Projects on development of new mineral deposits

investments mil. Rubles

JSC «Fedorova Resources», construction of mining and concentration complex (platinum group metals)

16640

LLC “Gornorudnaya company “Gremyakha", construction of MMC (ilmenite-titano-black iron ores)

13908

JSC «North-West Phosphoric company», construction of MCC (apatite-nephelinic ores)

23952

LLC «Northern Chromite company», construction of MCC (chromium ores) 10974

MINING ENTERPRISES

JSC «Apatite»

Number of employees 11,7 thousand people Productivity of 4 mines 28 mil. Tons per year

Apatite concentrate 7,5 mil. tons Nephelinic concentrate 1 mil. tons

Development of the company: • Investment projects on rendering support to

mineral resources base • Scientific research and experimental and

industrial pilot works on complex reprocessing of apatite-nephelinic ores and diversification of production

JSC «KOVDOR GOK»

Number of employees 3,7 thousand people Productivity of quarry

16 mil. Tons of ore per year Iron ore concentrate 5,4 mil. tons Apatite concentrate 2,5 mil. tons

Baddeleyite concentrate 10 thous.tons

Development of the enterprise: • Deepening the quarry, using new

technologies in mining • Development of new deposit of apatite-

shtaffelite ores • Complex modernization and

reconstruction of production

MINING ENTERPRISES

JSC «Lovozersliy GOK» Number of employees: 985 people Production capacity of the mine: 304,1 thousands tons per year Loparite concentrate 6,51 thousand tons PROBLEMS: Оabsence of technological chain on rare metal production in Russia. Development of the enterprise: • Modernization of production, directed at reduction of

prime cost of ore and concentrate; • Development of the fields of evdialite and loparite

ores of the section Alluaiv;

JSC «Olenegorsky GOK»

Number of employees 2,3 thous. people Production: Iron ore concentrate - 4,7 mil. tons Construction macadam - 1,4 mil. m3

Development of enterprise: • Support and development of ore basis • Complex re-equipping and modernization of production

JSC «Kovdorsluda» LLC «Kovdorsluda»

Number of employees - 560 people Field reserves: Kovdor phlogopite – 66 years Kovdor vermiculate – 240 years Kuru – Vaara quartz- feldspathic – 140 лет PROBLEMS: 100% deterioration of equipment, production volumes decreased in 2 times Development of the company: • Reconstruction of phlogopite and pegmatitic process plant •Creation of technological production lines on reprocessing of man-made wastes of quartz feldspathic raw materials

ENTERPRISES OF NON-FERROUS METALLURGY

JSC KOLA GMK (MMC) Number of employees 8,7 thousand people

Ore extraction 6-7 mil. tons a year Volume production of non-ferrous

metals – 28 billion rubles

Development of the enterprise: • Introduction into exploitation

quarry “Sputnik” 2010 • Attainment of project capacity of

the Mine «Severniy glubokiy» 2011

• Implementation of program of reconstruction of metallurgic production

• Reconstruction of sulfuric workshop

Branch of JSC «SUAL» «Kaz-Sual» SUAL Holding

Number of workers – 876 people

Aluminum production 76 тthousand tons per year

Development of the enterprise: Implementation of program of

modernization allowed increasing project capacity for

40%

Норвегия

Финляндия

Б а р е н ц е в о м о р е

Б е л о е м о р е

ГЕОЛОГИЧЕСКАЯ КАРТА КОЛЬСКОГО РЕГИОНАГл. редактор Ф.П. МитрофановНорвегия

Финляндия

Б а р е н ц е в о м о р е

Б е л о е м о р е

ГЕОЛОГИЧЕСКАЯ КАРТА КОЛЬСКОГО РЕГИОНАГл. редактор Ф.П. Митрофанов

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Map keys 1 – ГGremyakhaa-Vyrmes (titanium, ferrous) 2 – Nittis-Kumuzhia-Travyanaya (Platinum group elements) 3 – Solcheozerskoe (chrome) 4 – Alluaiv (rare metals) 5 – Afrikanda (ferrous, titanium) 6 – Bolshaya Varaka (titanium) 7 – Kolmozero-Voronya (gold) 8 – Vasin-Mylok (rarre metals) 9 – Polmostundrovskoe (rare metals) 10 – Kolmozerskoe (rare metals) 11 – Sakharyok (rare metals) 12 – Keyvy (alum clay) 13 – Fedoro - Panskiy (Platinum group elements 14 – Sallanlatva (barytes)

Prospect mineral raw material resources

The map of fields in the Western Arctic

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Ледовая

Шт окмановское

Туломская

Предновоземельская

Дмит ровскаяБорт овая

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Междушарская

Папанинская

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Тат ариновская

Мининская

Русская

КолоколморскаяПриколгуевская

Поморское

Сев.-Гуляевская

Алексеевская ПриразломноеСев.-Долгинская

Вост очно-Колг уевская

Ахмат овская

Мурманское

Вост очно-Корг инская

Корг инская

Северо-Куренцовская

Северо-Поморская

Куренцовская

Северо-Кильдинское

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Южно-Тамбейское

Вос т очно-Тамбейская

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Харасавэйское

Бованенковское

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Северо-Каменномысская

Ямбургское

Юрхаровское

Уренгойское

Шугинская

Надымское

Крузеншт ер-новское Западно-

Сеяхинское

Северо-Харасавэйская

Амдерминская

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Западно-Шараповская

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Белоост ровская

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ОБОЗНАЧЕНИЯ 1 северо-восточны й шель ф Баренцева моря 2 шельф Печ орского м оря

3 шельф Карс кого моря

4 шельф Обско-Тазовской гу бы

Обская

Investors: Gasprom, Total, Statoil ASA Project production volume: 71,1 bln. m2 of gas and 27,2 mln. tonnes of LNG/ year Investments: 44 bln. USD

Strategic projects/ Development of Shtokman GCF 1

Inclusion of the region into a system of Arctic shelf development as a main base 17 bln. USD of investments on the territory of Murmansk region 1 500 new workplaces and orders for enterprises of Murmansk region Modernization and construction of social and transport infrastructure of the region and provision of gas supply for the region Taxes in budget of Murmansk region and Teriberka

Underwater production of natural gas Plant LNG Coast and offshore pipeline infrastructure Port transport-technological complex Building of village for employees

Project include: Value for Murmansk region:

Development of Shtokman GCF

Shtokman GCF is situated in the Russian sector of Barents sea, it was opened in 1988 • Distance from the coast of the Kola peninsula: 550km • The depth of the sea: 320-340 km • Total zone: 1600 km2

Unique resources • Raw: gas with low condensate • Explored resources are 3.9 trillion. m3 of gas and about 56 million tons of gas

condensate (category C1) • Depth of occurrence: 1800-2500 m

Development of the deposit • Three stages – 71.7 billion m3 of gas per year and 650 thousands of condensate

per year • First stage – 23.7 billion m3 of gas per year and 218 thousands of condensate per

year

Project Implementation:

2007- 2009: Projecting – Selection of concept – Search for the site

2009 - 2010: Preparatory works: Coordination of project Legal aspects Search for contractors Preliminary qualification

2007 2008 2009 2010

2010-2011 Projecting

Tenders

27 February 2008 – registration of SDAG 2011

2011 FID

•Глубоководная, незамерзающая, защищенная от волнения акватория/ Deep dwelling, non-freezing, and non-rough water; • Свободный выход в открытый океан, с относительно небольшой интенсивностью судоходства /Free access to the ocean with low intensity of navigation; • Близость транспортного узла к Европейскому и Американскому рынкам/ Transport hub is close to the European and American market; • Возможность использования международных транспортных коридоров используя Севморпуть, Транссиб и транспортный коридор Север-Юг/There is an ability to use the international transport corridors by using the Northern Sea Route, Trans-Siberian railway and transport corridor North-South; • Надежная связь Кольского полуострова железнодорожным, автомобильным, транспортом с промышленно- развитыми регионами России/ Reliable connection of the Kola Peninsula with the industrial regions of Russia by railway and automobile transports; • Порт независим ввиду отсутствия необходимости прохождения через международные проливы/ Port is independent because there is no need to go through the international straits; • Порт расположен в непосредственной близости к перспективным месторождениям нефти и газа на Арктическом шельфе/ The port is close to the prospective oil and gas deposits in the Arctic shelf; • Глубины в Кольском заливе позволяют обслуживать суда дедвейтом более 300 тысяч тонн/ Depth of the Kola Bay can handle ships with a deadweight of 300 thousand tons .

The Murmansk region The objective preconditions and justification of

feasibility of development of “Murmansk Transport Hub”

Strategic projects Murmansk Transport Hub

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For Northern Sea Route For Barents Euroatlantic

transport corridor For shelf development

projects in Arctic For export-import container

cargo of Rusian Federation

Port terminals Railway approaches Development of airport «Murmansk» Roads and logistic complex

Conservative scenario - 52 mln. tonnes Neutral scenario – 84 mln. tonnes

Basic elements of MTH Targeted cargo turnover of the port until 2020

Possible mechanism of investment stimulation : Port special economic zone (PSEZ)

Participants: Mintrans RF, JSC «RZD», LLC «Murmansk sea port «Lavna», CSC «Sintez-Petrolium», JSC «UK «Murmansk transport hub»

Goal of the project: Usage of MTH potential

Usage of MTH potential for assuring cargo flows:

Cargo terminal Oil terminal

Storage and distribution zone Logistics center Coal terminal

Coal terminal (reconstruction)

Стратегические проекты Мурманский транспортный узел

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For Northern Sea Route For Barents Euroatlantic

transport corridor For shelf development

projects in Arctic For export-import container

cargo of Rusian Federation

Port terminals Railway approaches Development of airport «Murmansk» Roads and logistic complex

Conservative scenario - 52 mln. tonnes Neutral scenario – 84 mln. tonnes

Basic elements of MTH Targeted cargo turnover of the port until 2020

Possible mechanism of investment stimulation : Port special economic zone (PSEZ)

Participants: Mintrans RF, JSC «RZD», LLC «Murmansk sea port «Lavna», CSC «Sintez-Petrolium», JSC «UK «Murmansk transport hub»

Goal of the project: Usage of MTH potential

Usage of MTH potential for assuring cargo flows:

Cargo terminal Oil terminal

Storage and distribution zone Logistics center Coal terminal

Coal terminal (reconstruction)

ENTERPRISES OF MECHANIC ENGINEERING

JSC «Kandalaksha pilot mechanic engineering plant» Number of workers - 296 people

Production: Interchangeable parts to diesel engines; pumps, equipment for car petrol stations, non-standard metal constructions, Technological equipment, industrial equipping, production of MPC. Development of enterprises: Modernization of machine-assembly and instrumental workshops. Development of new product types.

JSC «Olenegorskiy Mechanic Plant»

Number of employees - 525 people

Production: Spare parts and non- standardized equipment for mining and Metallurgic enterprises, iron and steel casting, non-ferrous casting, Fabricated metal constructions Development of the enterprise: Modernization of production And development of new types of products on orders of consumers