FSBI Marine Rescue Service is on the sanctions list of U.S. Department of the Treasury due to its involvement in construction of Nord Stream 2 gas pipeline. Apart from search and rescue of people in distress and response to oil spills at sea, the company ensures safety of most Russian offshore projects in the Okhotsk and Caspian seas and in the Arctic. In his interview with IAA PortNews, MRS head Victor Chernov tells about a balance between commercial revenues and public expenditure in view of new sanctions and delivery of hydraulic engineering facilities in 2022-2023.
- Will the number of contracts with companies operating on the Russian shelf decrease amid sanctions?
- With the general decrease of business activities we run the risk of contracts reduction, of course.
- Does it mean termination of long-term contracts?
- All long-term contracts signed earlier are effective so far. At worst, their deadlines are postponed. In the changing market situation no new contracts can be expected if there are no new projects. Our key partners are major oil and gas companies of the country.
- Which tenders on surveying Turkish Stream, Nord Stream-1, and Blue Stream pipelines are in the focus of Marine Rescue Service for the near future?
- Technical state of our ships, competence of our specialists and availability of required quality allows for our participation in such tenders. However, from 2014, when sanctions were imposed against offshore projects of Russia, foreign companies withdrew from the Nord Stream 2 to avoid secondary sanctions. Since specifications of the fleet, equipment and personnel are quite peculiar our company was contracted for operation under the project. Nine ships of MRS were deployed for Nord Stream 2: multifunctional rescue ships Murman, Spasatel Karev and Bakhtemir, transport tugboats Umka, Sibuch and Finwhale, research ship Baltic Researcher, supply ships Artemis Offshore and rescue tugboat Kapitan Beklemishev as well as subsea equipment and specialized professionals. From 2021, Marine Rescue Service and its ten ships including those nine involved in Nord Stream 2 are covered by the U.S. Department of the Treasury sanctions. However, no sanction pressure will interfere with our decision on participation in tenders. Those are commercial projects. Pipelines undergo surveying annually and if we are able to win the competition we will execute those works.
- What were the company’s results in 2021? What is the forecast for 2022?
- Financial results were good in 2021, primarily due to operation under the Nord Stream 2 project. The year of 2022 will certainly show a decrease versus 2021.
In 2021, Marine Rescue Service conducted 246 rescue operations including sear and rescue of people at sea, refloating of stranded ships, towing, firefighting and oil spill response operations.
- How will the termination of the contract between OPITO and MRS Training Center affect the trainees?
- Initially, we passed OPITO certification for a year and a half and we have been conducting training according to those international standards from 2017. In late 2021, we successfully passed OPITO’s annual audit. We have all the licences, standards and equipment needed for training. In March 2022, OPITO joined sanctions against Russia. All Russian organizations certified earlier were notified by OPITO of contracts termination. Water survival courses based on international standards are in demand of Russia’s offshore industry. Our Training Center continues training of specialists. High quality training at our center is well known in Russian offshore industry but now those trained will not obtain a Diploma ID from OPITO. I emphasize that termination of our relations with OPITO does not affect the quality of training. It is essential for customers which want their employees pass water survival training such as helicopter underwater escape training.
Rescue of people is absolutely beyond international cooperation, likes or dislikes from the side of neighboring states. International agreements on cooperation in search and rescue of people at sea or oil spill response operation are not cancelled.
- How does the situation affect international cooperation in the industry?
- International exercise Barents Rescue 2022 scheduled for early June 2022 has been cancelled on the initiative of Norway and the cooperation has been put on hold. The issues of oil spill response exercise in the Bering Sea involving the U.S. Coast Guard scheduled for 2023 has also been put on hold. Rescue of people is absolutely beyond international cooperation, likes or dislikes from the side of neighboring states. Marine Rescue Service guarantees implementation of international obligations of the Russian Federation on search and rescue of people in distress within the Russian Federation. In fact, international agreements on cooperation in search and rescue of people at sea or oil spill response operations are not cancelled.
- Does Marine Rescue Service keep its shipbuilding plan alive in view of the hard to forecast development of the situation?
The fleet of Marine Rescue Service currently numbers 296 units. The plans on construction of new ships have been developing for years. Only one month has passed since introduction of large-scale sanctions. The price of imported components has certainly increased. Logistic chains are going to change but I am sure that everything will be built. It is only a matter of increased cost and time. A total of 16 ships have been foresees and contracted under CPMI. Those projects are virtually ‘iron-clad’ but the deadlines seem to be postponed.
- What about the plans on further expansion of MRS fleet taking into account the plans on NSR traffic increase?
- The state programme aimed at the development of the Northern Sea Route foresees the construction of 23 SAR vessels by 2030 and 16 more vessels by 2035. Besides, there is a project on construction of coastal bases along the NSR which are to be used together with EMERCOM. In the coming years, coastal bases are to appear in Pevek, Diksi and Tiksi. They will ensure prompt response in case of emergency. In 2021, Marine Rescue Service commenced building its own large base in Murmansk.
- Are there any structural changes expected within MRS?
- They have already happened. Having affiliated with the remains of FSBI Podvodrechstroy we obtained a non-core function of hydraulic engineering. We have been actively developing this new activity for the recent couple of years.
- How many OSR operations did MRS perform in 2021 out of the total number of 246 rescue operations?
- In 2021, Marine Rescue Service took part in 137 oil spill response operations. 137 means 1 oil spill in 2.5 days on the average. The guilty were not identified in 116 cases. According to the law, those responsible for the damage should pay for it. First of all, they should cover the cost of response operations. Secondly, they are to be fined by Rosprirodnadzor and compensate for the damage. With no guilty identified in most cases Marine Rescue Service performs large-scale and costly works at its own resources and Rosprirodnadzor gets no resources for the nature recovery.
Revenues from MRS activities cover expenses of the company for implementation of state tasks and for response to oil spills with unidentified source instead of being used for the company development
- Do you account revenues lost due to damage?
- This category of Marine Rescue Service’s expenses is accounted but, as I have mentioned, there is nobody to cover them since formally there are no guilty revealed. I have frequently said at various levels that ad hoc control authorities are not good at finding polluters. Revenues from MRS activities cover expenses of the company for implementation of state tasks and for response to oil spills with unidentified source instead of being used for the company development. At the same time, we are still responsible for indexation of wages to keep it competitive. There is also a problem of qualified onboard personnel flow to commercial companies where they are offered wages larger by a half.
- What was the share of commercial revenues versus state financing in 2021?
- State financing of Marine Rescue Service covers about one third of expected expenses for implementation of the state task. Other activities including the company development are financed by off-budget resources earned by Marine Rescue Service in the competitive service market.
- Will the reconstruction of automobile-railway service Vanino-Kholmsk and a service in Ugolnye Kopi be postponed?
- The first team of 10 specialists left for Ugolnye Kopi (Anadyr, Chukotka) on March 24. Production cycle in the region is limited by climate conditions. The works had been suspended for the winter period. The first team will conduct depreservation works and about 10 days later the main group will come to resume operations. 90% of construction materials has been delivered. The works are to be completed by the end of September.
The first phase of Vanino-Kholmsk service on Sakhalin is to be put into operation in October 2022, the second phase – in 2023.
- When will the terminal in Pionersky be put into operation?
- A competition is currently underway to select subcontractors for some construction and assembly works. Dredging works have been completed. The issue of compensation for increased cost of works due to the hike of materials prices is being resolved. A solution has been found. Hopefully, the commissioning schedule will be met.