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Three’s Company: Gazprom Neft Invites Partners to Eastern Siberia

This is an abridged version. The full text is avaiable to subscribers to The Russian Energy weekly.

The oil arm of Gazprom wants to almost double its production within the next eight years and boost the size of reserves. Field development programs will absorb the company’s own funds—and international players get a chance to play a role in exploring untapped reservoirs.

The 20-100 Program

The board of directors of Gazprom Neft reaffirmed in late March the company’s strategic goal of producing 100 mln t of oil equivalent in 2020. Half of this volume is to come from greenfield projects. In 2011, production totaled 57.8 mln toe and the estimate for this year is 59.6 mln toe.

The tempo of growth is actually slowing down. Last year it was 8% and in 2012, only a 4% increase is anticipated. Oil production at ageing West Siberian projects of the company will go on shrinking and Gazprom Neft will do what it can to expand in new regions of Russia.

Gazprom Neft intends to invest its own funds in developing large and well-explored deposits, including those it has received from the parent company—such as the fields in the Orenburg Region, Novotrporovskoye and the Messoyakha group. These projects, however, will yield only 20 mln tpy by 2020, and leave a gap of another 20 mln tpy with the proclaimed goal of 100 mln tpy.

‘Another 10 million tonnes will come from foreign projects: about 2.6 million of plateau production at the Badra project in Iraq; 5.3 million at Junin-6 in Venezuela; and nearly 2.5 million tonnes at Serbia’s NIS,’ Univer chief of analysis Dmitry Alexandrov says.

It means that Gazprom Neft will have to produce at least 10 mln tpy in Eastern Siberia. ‘The East Siberian fields have uncertain geologic prospects, but this is where foreign partners can play a role,’ Alexandrov comments.

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