the RUSSIA oil & gas competitive intelligence report - Report Buyer

Russia Oil and Gas Competitive Intelligence Report 2010
which will boost demand for longer-life bitumen products. To contribute to the 60% growth target, TNK-
BP aims for a 50% increase in production of its polymer-modified TNK Alfabit brand of premium
bitumen from 24,000 tonnes in 2009 to 36,000 tonnes in 2010. TNK-BP claimed that using TNK Alfabit,
which will be produced at its pilot plant in Ryazan, 250km south-east of Moscow, could extend the life of
a road to seven-10 years from the current two to three years.
The Russkoye field, located in Russia's Yamal-Nenets region, holds an estimated 2.25bn bbl of oil
reserves (international P3 classification). Discovered in 1968, the field remained undeveloped owing to
the challenging climate and the lack of heavy oil processing technology. TNK-BP estimates the total cost
of developing the field at US$4.5bn. Peak production is expected to be between 200,000b/d and
400,000b/d, depending on whether TNK-BP constructs facilities for blending the oil to allow it to be
transported by pipeline.
TNK-BP is ramping up volumes at the Uvat project in the Tyumen region of West Siberia. In early
February 2009, its subsidiaries Tyumenneftegaz and TNK-Uvat brought onstream the Ust-Tegusskoe
and Urnenskoe fields. According to TNK-BP's figures cited by Oil & Capital, output from the two new
fields was expected to average 60,000b/d in 2009 and above 100,000b/d in 2010. The company expects to
reach peak output of approximately 220,000b/d in 2015/16. The Ust-Tegusskoe and Urnenskoe fields will
account for half of that figure, while the other half will come from smaller satellite fields that are yet to be
developed. By end-2009, total investment in Uvat was set to reach RUB13bn.
TNK-BP entered the Uvat district in the early 1990s and has since discovered an estimated 1.47-1.61mn
bbl of recoverable reserves (C1+C2) in its 13 licences in the area. There are currently 21 known fields in
the Uvat project, the first of which, Kalchinsoe, entered production in 1993. Discoveries in 2007/08
included the Kosukhinskoe, Protozanovskoe, Secero-Kachkarskoe, Nemchinovskoe, Sredne-Keumskoe,
A.Malyk, Yuzhno-Venikhyartskoe and Zapadno-Epasskoe fields. Uvat is set to become a cornerstone of
TNK-BP's Western Siberian strategy, with the company planning to incorporate its assets in the
neighbouring Omsk and Khanty-Mansiysk regions into the project.
Russia's environmental watchdog Rosprirodnadzor has advised Rosnedra, Russia's subsoil agency, to
withdraw the licence for the Kovykta gas condensate field from TNK-BP. A dispute over the field's
development has been ongoing for years, with TNK-BP being pressured to sell its 62.8% stake to a stateowned
company. In June 2007, an MoU was signed under which TNK-BP agreed to sell its interest in
Rusia, the operator of Kovykta, to Gazprom. Talks over the sale broke down, however, and since July
2009 Gazprom seems to have put its interest in the field on the backburner as a result of the recession.
In the past Rosnedra has argued for the removal of the licence from TNK-BP thanks to the company's
inability to raise production to 9bcm as required under the terms of the licence. However, this output
target was based on the assumption that the Irkutsk authorities would comply with their part of the
contract through building the required downstream infrastructure to channel Kovykta's gas to end-users.
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