No. 1, 2005

Dmitry Gurtovoy


LUKOIL's subsidiaries awarded National Ecological Prizes for their environmental activity

A National Ecological Prize was presented in Moscow on October 22, 2004, within the framework of the International Forum of Innovative Technologies of the 21st Century for Natural Resource Management, Environment and Sustainable Development for the most

effective lines of ecological research and environment-friendly technology solutions. It is most gratifying that JSC LUKOIL-Kaliningradmorneft has been pronounced Russia's first winner of the Prize in one of the three main nominations of the contest.

Contesting for the bronze trefoil

The National Ecological Prize was established in 2003 by the V. Vernadsky Nongovernmental Ecological Fund with the support of the RF State Duma's Ecology Committee, the RF Ministry of Industry, Science and Technology, the RF Ministry of Atomic Energy, the RF Ministry of Natural Resources, the RF Chamber of Commerce and Industry, and JSC Gazprom.

The contest pursued wide-ranging objectives from the start. "We seek to draw the attention of scientists, specialists, companies and the international public to current ecological problems, to bring out and encourage the more effective research and development projects in the sphere of energy- and resource-saving technology and environment-friendly production facilities, to promote investment in ecology-oriented high-tech solutions", Kirill Stepanov, the Fund's General Director, said prior to the opening of the prize presentation ceremony. Programs and projects concerned with R&D efforts toward environment-friendly design solutions and technologies, ecologically sound natural resources use, as well as in the spheres of education and upbringing, were entered in the 2004 contest. Open to organizations, companies and individual specialists, the contest turned out to be most representative geographically. It drew 149 companies from over 50 regions of Russia and from other countries. The LUKOIL Group subsidiaries took an active part in it.

The prize-awarding ceremony was held in Moscow at the end of 2004. There were three main nominations: Contribution to Sustainable Development; Ecoefficiency; and Clean City. In their turn, they were subdivided into several sub-topics.

In the first nomination, an award was presented to the authors of the book Scientific Foundations of the Sustainable Development of the Russian Federation, among them Viktor Khristenko, RF Minister of Industry and Energy of the Russian Federation, Gennady Seleznyov, Deputy of the RF State Duma, and other prominent public figures.

In the second nomination, the prize was awarded to JSC Orgenergogaz for the project The Blue Stream Russia-Turkey Gas Flow Monitoring System.

LUKOIL-Kaliningradmorneft took the prize in the third nomination for the project Integrated Ecological Safety Arrangements in the Process of the Kravtsovskoye (D-6) Oil Field Development in the Baltic Sea.

The winners received diplomas, money prizes in the amount of 150,000 rubles and the main award - a bronze trefoil with a globe inside intended by the sponsors to symbolize the biosphere and the noosphere.

Saving the Amberland

Kaliningrad's oilmen and the entire LUKOIL Group take pride in having put into commercial production the Kravtsovskoye (D-6) oil field 22.5 km off the Kaliningrad Region's coast the C1+C2 category oil reserves of which are estimated at 21.5 million tons, with recoverable reserves amounting to 9.1 million tons.

LUKOIL engineers made every provision for ruling out the project's adverse impact on the environment at all the stages of oilfield construction and development. Its unique offshore ice-resistant stationary platform and the marine pipeline were put together on shore, in a 40-meter-high assembly shop constructed specially for the purpose by the steelwork production plant ? a structural unit of LUKOIL-Kaliningradmorneft.

All production processes are carried out on the platform in accordance with the zero discharge principle meaning that all miscellaneous wastes from the platform are transported to shore for recycling and further utilization. LUKOIL has drawn on the previous experience of using this principle on the Astra platform in the Caspian.

Oil produced by the platform from the offshore pool goes to shore along a marine pipeline 47 km long and then proceeds to the Romanovo oil gathering station along a surface pipeline. Upon being brought to marketable condition there, oil is piped to the Izhevskoye oil-loading terminal to be loaded into tankers.

As part of the D-6 construction project feasibility study, the Company drew up the Oil Spill Prevention and Elimination Plan. The plan models scenarios of accidents (should they happen at all), calculates the degree of their probability and the likely oil

spill drift paths, ascertains the ways and means of spill localization and skimming. The Company has purchased all the necessary spill detection and elimination equipment.

While developing the offshore oil field, the Company will use a reliable environment control and monitoring system. For years now, the Company has been conducting baseline monitoring surveys of the Baltic using research vessels of the RAS Oceanology Institute, the Atlantic Research Institute of Marine Fisheries and Oceanography (AtlantNIRO) and its own fleet.

In July 2004, LUKOIL-Kaliningrad-morneft launched a comprehensive south-eastern Baltic satellite monitoring program as part of the EcoBaltics project (marine environment quality control). Monitoring is conducted round the clock, the quality of high-resolution wide-angle space photographs does not depend on weather conditions and solar illumination intensity. The data obtained through space monitoring go into plotting maps of oil spills drifting in the Baltic, both caused by local accidents and brought in by sea currents from other regions.

"LUKOIL provides every guarantee of the field's environmental safety. Our project has undergone an environmental impact assessment carried out by independent ecological organizations and we see to it that all the international ecological standards are strictly observed"- such is the position of LUKOIL President Vagit Alekperov.

Logical results

LUKOIL-Kaliningradmorneft was not LUKOIL's only subsidiary to win a prize in that prestigious contest. For their contribution to Russia's ecological safety and sustainable development, six more projects, submitted by the LUKOIL Group, received National Ecological Prize diplomas: Development and introduction of modern socially responsible natural resources management technologies in oil fields within the Arctic Circle (JSC LUKOIL); Prospecting works and hydrocarbon field development organization in the Northern Caspian (JSC LUKOIL-Nizhnevolzhskneft); A comprehensive solution to the ecological distress zone elimination problem in the Usinsk District of the Republic of Komi (JSC LUKOIL-Komi); Bioremediation of polluted soils (LUKOIL-Neftochim Burgas, Bulgaria); Integrated industrial, occupational and environmental safety control system (JSC LUKOIL-Perm); Methodological foundations and baseline technologies of sound natural resources management and environmental protection in oil- and gas-well construction (JSC LUKOIL VolgogradNIPImorneft).

Such results are only too natural. Russian oilmen are being increasingly concerned about environmental safety. This concern is not merely part of the formal obligations they have assumed - environment-consciousness came naturally as soon as the oil industry became aware of its responsibility for the nation's ecological welfare.

In general, LUKOIL elevated its environmental program to the rank of corporate ethics. The Company has adopted a unique intra-corporate document Industrial, Occupational and Environmental Safety Control Policy in the 21st Century. In accordance with that document, the Company prioritizes the provision of safe working conditions for its personnel, protecting its employees' and local residents' health and keeping the environment intact. On the whole, the document's provisions subordinate LUKOIL's and its subsidiaries' activities to stringent ecological requirements. Even the contractors employed to do various jobs for the Company are obliged to comply with LUKOIL's environmental policy standards. This policy embraces all lines of its activity from field development to managerial decision-making.

The implementation of the 2000-2003 Ecological Safety Program of the LUKOIL Group Companies was completed in 2003 to produce much lower specific environmental impact levels than the oil industry's national averages. As part of Program implementation, over 4,280 km of pipelines were overhauled; over 2.6 million tons of hazardous wastes were recovered and disposed of; over 14,500 hectares of spoiled land and about 1,500 hectares of oil-polluted land were recultivated; 1,507 dirty mud sumps were eliminated.

In July 2004, the LUKOIL Managing Board approved the 2004-2008 Ecological Safety Program of the LUKOIL Group Companies, which provided for about 400 actions worth a total of 34.5 billion rubles. The actions are sorted out into eight basic sub-programs: Clean Air, Clean Water, Wastes, Recultivation, Emergency Prevention and Response, Research and Development Work, Ecological Management, and Ecological Monitoring. The Program has been drawn up in accordance with the National Security Conception of the Russian Federation and with regard for the provisions of the Ecological Doctrine of the Russian Federation, which pays close attention to sustainable development of renewable and rational utilization of non-renewable natural resources.

Last October, LUKOIL had its environment protection management and industrial safety management systems certified, once again, as conforming to the ISO 14001 and OHSAS 18001 international standards. In 2004, LUKOIL-Nizhnevolzhskneft, LUKOIL-Volgogradnefteorgsintez, LUKOIL-Nizhegorodnefteorgsintez passed a certification audit for conformity to international management system standards. By 2007, industrial, occupational and ecological safety management systems of all the LUKOIL subsidiaries are to be certified for compliance with high international standards.

By now the Company's environmental activity has reached a level where an improvement of environment quality can be attained only through pollution prevention by using low-waste and resource-saving technologies, i.e. by pursuing an environment-friendly production strategy - the very strategy that forms the cornerstone of the Company's conservation policy.

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Oil of Russia, No. 1, 2005
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