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Russia Oil and Gas Competitive Intelligence Report 2010 previous announcement made in April 2009, which put the North Caspian target at 260,000b/d and 14bcm by 2016. The April 2009 announcement called for RUB390bn (US$16.6bn) of Caspian investment. After Korchagin, the second field, the larger Filanov (Filanovskoe), is due onstream in 2014. Gas output from Korchagin and Filanov will be pumped to the Russian region of Kalmykiya and then onwards to Gazprom’s trunklines. Development of the mostly gas-bearing Khvalynskoe deposit on the Kazakh maritime border is carried out under a PSA held by the Caspian Oil and Gas Company consortium comprising Lukoil (50%), state-run KazMunaiGaz (KMG, 25%), and French companies Total (17%) and GDF Suez (8%). Khvalynskoe is expected to peak at 8bcm and is preliminarily due onstream in 2016. The North Caspian fields are located relatively close to Lukoil’s refineries including plants at Odessa (Ukraine), Bourgas (Bulgaria) and Ploieşti (Romania). In June 2009, a state-run Russian financial institution acquired a stake in Lukoil. The companies did not comment on the size of the stake and the terms of the deal, but unnamed sources have told Reuters that the stake is less than 5%. Lukoil and Transneft have allegedly approached Polish refiner PKN Orlen over buying a stake in Lithuania's Mažeikių refinery, Polish media reported in April 2009. PKN’s trumping of Russian bids for a controlling stake in Mažeikių in 2006 coincided with Transneft’s decision to shut down the refinery's feedstock pipeline owing to apparent technical problems. One of the company's most high-profile foreign deals, the purchase of a 10% stake in Spanish-Argentine company Repsol YPF, fell through in late 2008 after the Spanish government appeared to implicitly blocked the deal as a result of popular opposition. © Business Monitor International Ltd Page 39
Russia Oil and Gas Competitive Intelligence Report 2010 TNK-BP Company Analysis SWOT Analysis Following an acrimonious battle for control over TNK- BP during H108, BP and its Russian partners in September 2008 restructured the board and top management, signalling a new chapter in the company’s history. TNK-BP has the potential to challenge Russian oil industry leaders over the medium term. While it will take years to become a leading Russian oil company, it should rapidly become the most profitable given BP’s commitment. Long-term gas interests capable of supplying the Asian markets provide another dimension. All of these opportunities depend, however, on the company staying in the Kremlin’s good books. Strengths: Major oil producer Significant share of refining capacity Large fuels retail network Portfolio of CEE downstream interests Benefits of BP management/technology Weaknesses: Complex corporate structure Inherited high cost base and inefficiencies Financial Statistics Revenues: • US$34.75bn (2009) • US$51.9nn (2008) • US$38.6bn (2007) • US$35.5bn (2006) • US$30.0bn (2005) Net income: • US$4.97bn (2009) • US$5.3bn (2008) • US$5.3bn (2007) • US$6.6bn (2006) • US$4.7bn (2005) Operating Statistics Oil production (inc. JVs): • 1.68mn b/d (2009) • 1.45mn b/d (2008) • 1.42mn b/d (2007) Gas production: • 12bcm (2009) • 11.6bcm (2008) • 9.4bcm (2007) Refining throughput (Russia): • 574,000b/d (2009) • 675,000b/d (2008) • 778,000b/d (2007) Proven oil and gas reserves (PRMS) • 11.67bn boe (2009) • 8.1bn boe (2008) • 8.3bn boe (2007) Opportunities: Growth in Russian oil production Rise in CEE regional oil consumption Cost cutting/asset upgrading potential Long-term gas export opportunities Threats: Sustainability of Russian oil growth Oversupply in CEE refining capacity Changes in national energy policy © Business Monitor International Ltd Page 40
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