White nights, black gold: Russia's oil riches come to light

By Nick Allen Jun 26, 2006, 3:41 GMT

Gubkinsky, northern Russia - Your Russian oil and gas may as well have come from space - the people who produce it talk of 'returning to earth' when they leave its remote Siberian source.

Starting 1,400 kilometres northeast of Moscow and reaching far into the Arctic, the vast Yamalo-Nenetsky autonomous district is a leading centre of the national oil industry.

In this sprawling wilderness of swamps, rivers and frost-stunted pine forests, Russian companies frantically work to bring the so-called black gold to hungry western markets and capitalize on record world prices.

Huge deposits by the town of Gubkinsky were discovered by Soviet geologists in the 1960s and are tapped today by the state oil giant Rosneft and its regional subsidiary Purneftegaz.

While accounts of minus 60 degree Celsius temperatures chill foreign visitors, locals shrug off the winter conditions as an inconvenience, like the swarms of mosquitoes in the sweltering heat and white nights of summer, when the sun never sets.

Nothing halts the flow of crude, they boast with pride.

'We never stop production, it's too expensive to restart,' said Eduard Tropin, the general director of Purneftegaz, which employs more than 10,000 people.

'This is the jewel in our crown,' he adds, showing visitors the Komsomolskaya oil field to the trilling of a cold wind and the ceaseless hum of its nodding donkey pumping rigs.

This is one of five oil and gas fields operated by Purneftegaz and produced 11 million tons of crude since it started work in 1988. It now pumps 5,200 tons a day from 357 wells, some of them 3.4 kilometres deep and requiring minute care of equipment that stretches into the bowels of the earth.

'If a defective pump is installed and has to be removed it immediately costs a minimum of 1.5 million rubles (55,000 US dollars),' said Andrei Popov, the head of the pump maintenance depot.

The oil and accompanying gas yield is piped to an outlying refinery and then fed into the national pipeline grid to commence its long journey to consumers in Russia and Europe.

The same scene plays out daily in resource-rich regions across the country, in the North Caucasus, eastern Siberia and in the Far East on the island of Sakhalin and off the Kamchatka peninsula.

Mindful of the strategic role oil and gas play in Russia's economic growth, data on the exact amount of reserves - proven, probable and possible - were classified as a state secret in 2004.

At the start of 2005, Russia took second place in world oil production after Saudi Arabia and, by some estimates, sixth place in proven reserves (9.9 billion tons, or 72 billion barrels, British Petroleum Statistical Review of World Energy). Its proven natural gas reserves of 48 trillion cubic metres in 2004 were unmatched.

The country's three million oil workers know the lion's share of the profits bypasses them as revenues are funnelled through Moscow into the state coffers or to accounts of commercial oil companies.

Nonetheless, the sector's comparatively high wages always lured people in droves to places like Gubkinsky.

There is fierce competition for jobs in this town of 20,000 residents, with a steady turnover of migrant workers from across Russia and the former Soviet Union. The average monthly pay at Purneftegaz is 37,000 rubles (1,366 US dollars), around four times high than the national rate.

While the workers are blase about the harsh conditions, the wages in part compensate for the deprivations and physical exertion of living so far away from 'the earth'.

Even in summer the permafrost ice starts just 1.5 metres below the surface. In the autumn, the town digs the anticipated number of graves at the cemetery before winter locks the soil like concrete.

Vehicles travel in threes to the oil fields 50 kilometres away, each half-full in case of a breakdown. In minus 60 degrees a spanner can simply snap in two and being stranded simply is not an option.

'You can't imagine what it takes to start a car in minus 50,' says driver Vasily Belous, who came here from the Ukrainian capital Kiev in 1988.

The northern climate takes its toll on health. Insufficient oxygen means people have twice as much haemoglobin in their circulation, suffer from vitamin deficiency and also cardiac problems because of sharp pressure fluctuations, said Alexander Yermakov, the head doctor at Gubkinsky's gleaming new 293-bed hospital.

All in all it is a hazardous business and production-related injuries are varied. Perhaps none was so memorable as the case when an oil worker's wife used purloined gas condensate to rinse the stains from his overalls before pouring the residue into the toilet.

Unaware, the seated husband later dropped a lit cigarette into the bowl, suffering spinal injury and third degree burns as he was blown clear by the resultant blast.

He's okay now, 'but he no longer works for Purneftegaz,' Director Tropin says with a taught smile.