the RUSSIA oil & gas competitive intelligence report - Report Buyer

Russia Oil and Gas Competitive Intelligence Report 2010
Lundin Petroleum – Summary
Swedish independent Lundin Petroleum has interests in four production licences and one exploration
licence in Russia. Its most prospective asset is the Laganskiy (Lagansky) Block in the Northern Caspian,
where the October 2008 Morskaya discovery is estimated to hold 230mn boe of recoverable reserves.
Although Lundin currently holds a 70% interest in Laganskiy, Gazprom has a call option to acquire a
50% plus one share stake. Lundin has also agreed a call option to acquire an additional 30% stake from
remaining shareholder Gunvor, an oil trader. Should both options be exercised, Lundin would retain 50%
minus one share in the block, leaving Gazprom 50% plus one share.
In February 2009, Rosnedra extended Lundin’s exploration permit for the Laganskiy Block until August
2014. The contract extension will allow Lundin to delay the drilling of the Morskaya-2 appraisal well
until 2010, which will test the western section of the discovery. The Petrovskaya structure, which was
estimated to hold reserves of up to 300mn bbl, however, has disappointed after the Petrovskaya-1
exploration well came up dry in November 2009.
OMV – Summary
Austria's OMV is looking to divest its Russian exploration assets and is talking to potential buyers, CEO
Wolfgang Ruttenstorfer said on May 20 2010. Its Russian assets, through subsidiary Petrom's majorityowned
Ring Oil Holding and Trading, are eight exploration blocks in the region of Saratov and two
blocks in the region of Komi.
In August 2009, Petrom reported its first Russian exploration success at the Lugovaya-1 well, located in
Saratov's Kamenskiy licence. Well tests showed a flow rate of more than 2,500b/d of light sweet oil in
one zone, while two gas-bearing formations produced a combined 4,000boe/d of sweet gas and
condensate. Russia's natural resources ministry said in October 2009 that reserves at the block could be as
much as 80mn tonnes, or 586mn bbl, although it did not specify the level of certainty attached to this
estimate.
Ironically, this exploration success may be the reason for OMV's decision to exit Russia. According to
Russian's law on strategic deposits, passed in May 2008, the state is empowered to take over oil
exploration licences where recoverable reserves exceed 70mn tonnes (513mn bbl). Should the natural
resources ministry's reserves estimate be accurate, the Kamenskiy licence would be subject to this law.
Although the law provides for compensation of costs plus a 30%-50% 'premium,' the fact that licences are
subject to state appropriation is a major risk and has contributed to negative investor perception of Russia.
Irkutsk Oil Company – Summary
Irkutsk Oil Company, known by its Russian acronym INK, was established in November 2000 by
bringing together several small oil and gas producers in the Irkutsk region of East Siberia. It was the first
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