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The Siberian Times

Gulags to Glitz in oil 'boom town'

21 February 2014

Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution.

'If Russia is able to successfully plumb its Siberian depths for shale oil and gas, it could leverage its energy holdings towards its ambition of becoming a great power once again'. Picture of Khanty-Mansiysk by Kate Baklitskaya, Go East

It's been called the Kuwait of Russia but the then regional governor Alexander Filipenko objected, saying: 'They produce three times less oil. In Europe there is light in light bulbs and heat in apartments because here we extract 7.5 percent of the world's oil'.

If the statistics are startling, then they may soon need to be redrawn, because the vast territory around this city is not only Russia's biggest oil producing region but home to most of the recoverable shale reserves in the Bazhenov formation, that extends across across 2.3 million square kilometres (890,000 square miles).

Natalia Komarova, current governor of Khanty-Mansii Automonous Okrug, recently told Reuters the formation could produce 400,000-600,000 bpd by 2020.

'Those resources could far surpass Saudi Arabia's legendary oil treasures and are at least as prolific as the Bakken formation in North Dakota that is feeding the boom in shale oil production in the US,' reported The Washington Times. 

Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 

British architect Sir Norman Foster's (first and second images) and Dutch architect Erik Van Egeraat's projects for Khanty-Mansiysk. Pictures: Foster and Partners, Erik Van Egeraat

The capital of this region already looks the part of the oil boom town that it is, but it also has grandiose plans for the future. Its population has more than doubled since the end of Soviet times - and though still small at 80,100 - the feeling is that this is a place that not only thinks big, but defies some of the familiar stereotypes of Siberia as grim with Gulags. 

The architecture back then was mainly traditional wooden houses but now the accent is on the modernistic in the Siberian equivalent of Texas. It regularly hosts events by FIDE, the World Chess Federation. The Chess Academy in Khanti-Mansiysk was designed to look like a giant space station by famous Dutch architect Erik Van Egeraat. He is also behind a planned 18-storey five-star hotel resembling a clump of silver and gold shards of glass.

British architect Sir Norman Foster, meanwhile, has drawn up plans for a 280 metre 'Diamond Crystal' spire intended as the tallest skyscraper in Siberia.

The ambitious scheme is intended to house a 161,000 square-meter business centre, along with a hotel. If these are yet in the mind's eye, a look around the city's 19 medical facilities, five museums, five public libraries as well as sports and theatre complexes shows a city that has benefited not lost from the vast oil extracted across this region lying two time zones east of Moscow. 

Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 

'It's been called the Kuwait of Russia but the then regional governor Alexander Filipenko objected, saying: 'They produce three times less oil'. Pictures of Khanty-Mansiysk by Kate Baklitskaya, Go East

Khanty-Mansiysk is a ski-ing and alpine ski-ing hub, with pistes immediately accessible for residents. It is a world class biathlon base, too. 

'Just 15-20 years back most of the buildings here in Khanty-Mansiysk were wooden' said the head of the development department of the Museum of Man and Nature Lidia Prosyannik. 'The pavements were wooden and the city looked like a village.'

Even though Khansty-Manisysk is officially is 432 years old, it only received the status of 'city' in 1950.

'At the beginning on the 1990s there was no place to get a higher education in Khanty-Mansiysk and most of the people went to study in Yekaterinburg, Tomsk, Novosibirsk. Many went to St Petersburg, that's why the most educated people here received their education in St Petersburg'.

Things are clearly much changed. As one Westerner who knows it, said: 'The Siberian region is distinguished not just that it has big money, it is in Moscow as well, but that hard-working people live there to be pleasant to work with. 

'When some delegations were coming to Khanty-Mansiysk in the 1990s, they were amazed with the beauty of the nature and the serenity of the place and asked not to change anything here,' said Irina Molchanova, the head editor of the Yugra TV.

'But the local administration set the right goals: what serenity and beauty can you talk about if the people still use wooden toilets outside their houses? I studied in St Petersburg, but decided to come back because you can grow and become successful here just like in any other big city'.

Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 

The world is starting to take note of the potential in this region of Siberia for fracking, the name given to obtaining oil by hydraulic fracturing. Pictures of Khanty-Mansiysk by Kate Baklitskaya, Go East

The local bank is seen as one of the strongest in Russia, and a key player in the growing mortgage market. The standard of living is seen as one of the highest in the country. It is also noted as attractive to foreign investors. 

'When the people in the villages ask why does the internet traffic is so slow we see that we are moving in the right direction. It's not the matter of having or not having internet in the region but of having a faster one,' said Irina Ponomaryova, press secretary to the head of Khanty-Mansii region.

When the transformation of Khanty-Mansiysk was first noted by foreigners around six years ago, Nikolai Petrov, an expert in Russia's regions at the Carnegie Centre think tank in Moscow, said: 'There's no other city like it. It's a potent symbol of how Russia has changed. Oil money can be seen in everything.'

One resident said that previously the city was seen as poor. 'It was all wooden houses. Now it's a city Russians strive to live in.'

The oil boom has also raised the standard of living of the local peoples which comprises the Khanty and Mansi groups, part of the Finno-Ugric peoples, a group that includes Estonians, Finns and Hungarians. Rosneft, the state oil major, is leading the drive to tap the Bazhenov formation along with  US giant ExxonMobil. 

A new tax regime to kickstart fracking means a zero rate of mineral extraction tax in Bazhenov and at another Siberian formation, Abalak. Soviet geologists first extracted oil from Bazhenov in the late 1960s but the deposits went undeveloped due to a lack of viable extraction technology, while abundant reserves of easily tapped crude existed in different strata in the same region, reported Reuters.

'Unconventional reserves were considered to be a special case, with only long-term perspective', Natural Resources Minister Sergei Donskoy said in a newspaper interview this year. There are still key technological questions on the ease of recovering the shale reserves, yet there is increasing optimism. 

Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 


Futuristic Khanty-Mansiysk gives a new image to Siberia ahead of shale revolution. 

'I studied in St Petersburg, but decided to come back because you can grow and become successful here just like in any other big city'. Pictures from Khanty-Mansiysk by Kate Baklitskaya, Go East

The Energy Ministry hopes the new law will boost the share of tight oil production to 11 percent of the Russian total by 2020 from a tiny 0.2 percent now.

'It looks very, very much like the Bakken from a geological point of view in that you have limestone that can be fracked,' said Tim Dodson, exploration chief at Norway's Statoil. The Bakken formation in the US states of North Dakota and Montana has become the leading producer of shale oil thanks to its good geology and infrastructure, and a supportive regulatory framework.

'The geology is absolutely fantastic and the scale of it is just enormous,' Dodson said. 'The Bakken looks minute compared to it.' 

Statoil is working with Rosneft to explore for shale oil in Russia. 

The world is starting to take note of the potential in this region of Siberia for fracking, the name given to obtaining oil by hydraulic fracturing. The US Energy Information Administration estimates Russian recoverable shale oil reserves at 75 billion barrels, more than the 58 billion barrels held by the United States, now the leader in shale oil production.

'The energy landscape is changing radically,' Arjun Sreekumar, an analyst at the Motley Fool, was quoted as saying by The Washington Times. 'With world-class operators like Exxon and Shell on board to provide the requisite skills, equipment, and know-how to exploit shale formations like the Bazhenov, Russia could very well have a shale revolution of its own within the next couple of decades'.

One international investor in Russia was quoted as saying the Bazhenov potential 'is nothing short of astonishing'. Another US observation pointed at how Russia since the Cold War has used its ability to supply energy to Europe and China as a means of asserting political influence. 

'If Russia is able to successfully plumb its Siberian depths for shale oil and gas, it could leverage its energy holdings towards its ambition of becoming a great power once again,' said Walter Russell Mead, a fellow at the Council on Foreign Relations and editor of The American Interest magazine.

Comments (6)

Right you are Enrique except for the people living in the North wouldnt want to relocate to Karasnodar region. The time when people realize that it's their land has finally come and they are not seasonal workers coming to the north to make some money and escape back home any more.
Kate, Russia
22/02/2014 16:54
3
0
Well, Siberia's changing rapidly. Might get even more fancy in a couple of years
Kate, Russia
21/02/2014 19:49
3
0
It is an exception in Siberia, but it shows it is possible to live well even under a cold climate. Kanthy-Mansysk is creating a new population hub in an sparcely populated area, and will be used as a link to the new port in Yamal serving the transcontinental Artic route....even if probably most Russians woould prefer to live in Krasnodar krai, with its long beaches, hehe.
Enrique, Spain
22/02/2014 08:48
2
0
How about Renewable Energy for once? thats what people wanna see that is new! if you really want to be a futuristic city with that skyscraper,why support what is already on shook ground? why support the "old thinker"? Yep right.. Future is oil because Norway has no way to escape if they were out of it, and what about Denmark who managed well without much? If you want to be any different or futuristic than other major cities that came into light, dont go all that road.
Sissil, Denmark
17/03/2014 02:30
0
0
Sissil, you are comparing the incomparable things. Renewable energy is important without a doubt but you wouldn't argue that the efficiency of the renewable energy is tiny compared to the energy produced by hydrocarbons. Look at the map and tell me can one compare the amount of energy needed for Russia and Denmark?
Kate, Russia
22/03/2014 19:40
2
0
Don't believe this is Siberia. It's not how it looked last time I was there.
Richard, Chicago
21/02/2014 12:59
5
0
1

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