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Russia Oil and Gas Competitive Intelligence Report 2010 to bring onstream oil production in Irkutsk and remains the largest producer in the region. The company currently holds 11 oil and gas fields, all operated by separate subsidiaries. The company appears to be owned by its management, with 8.1% held by the European Bank for Reconstruction and Development (EBRD). INK has a strong focus on gas capture and is pursuing various policies to eliminate flaring at its fields. Production in 2008 stood at 6,000boe/d. There are several developments in the pipeline, which should benefit from connection to the ESPO export pipeline. In November 2009, state-run Japan Oil, Gas and Metals National Corporation (JOGMEC) signed an agreement with INK to study the potential application of gas-to-liquids (GTL) technology at their joint projects. The agreement formalises GTL plans announced by the INK chairman in September 2009. The technology would be applied at the Mogdinskiy Severniy, Bolshetirskiy and Yaraktinskiy Zapadnyy blocks, which are being developed by INK-Sever, a 51:49 JV between INK and JOGMEC. Aladdin Oil & Gas – Summary Oslo-listed Aladdin Oil & Gas was founded in 2006 and is solely focused on Russian exploration and production. It holds four licences through its 100%-owned Geotechnologia subsidiary: Middle Sediolskoye, West Uthinskoye and two licences in the Timan-Pechora Basin, all in north-western Russia. In addition, the company's 100%-owned Orneftegaz and Veselovskoe subsidiaries are exploring in the south of the country: at Bogdanovskoe in the pre-Caspian depression and in the Volga-Ural Basin, giving Aladdin a total of eight Russian licences. According to Nedrelid, Aladdin has invested a total of NOK375mn (US$66.9mn) in Russia since 2006. In October 2009 Aladdin signed an agreement with Gazprom’s subsidiary KomiRegionGaz to sell 46Mcm per annum for five years from its Middle Sediolskoe field in the Komi Republic. Trial production started in March 2010. The gas price for deliveries will be adjustable, with the price for Q409 set at RUB1,770/mcm (US$60/mcm). On October 14, the company announced that it was increasing its P2 reserve estimates for the Middle Sediolskoe field to 383Mcm. Aladdin is hoping to produce 2,650boe/d in Russia in 2010. The Sediolskoye supply deal will provide Aladdin the funds towards the development of its remaining licences, after three years of net losses. Aladdin's future growth prospects will depend on the commercialisation of some of its other licences, particularly the oil-bearing West Uthinskoye licence. PetroNeft – Summary London-listed PetroNeft was established in 2005 to develop assets in West Siberia. The company owns Licence 61, which covers an area of 4,991sq km, with 100%. The licence is also located in the Tomsk region and contains two proven oil fields – Lineynoye and Tungolskoye – as well as around 25 additional prospective areas and further potential prospects that have been identified through seismic surveys. According to consultants Ryder Scott, the Lineynoye and Tungolskoye fields hold total proven, probable and possible (3P) reserves of 70.6mn bbl, while the additional and potential prospects are estimated to hold 3P reserves of 253mn bbl and exploration resource reserves (4P) of 100mn bbl. In early December © Business Monitor International Ltd Page 61
Russia Oil and Gas Competitive Intelligence Report 2010 2009, PetroNeft announced plans to drill nine wells on the licence, with the first one scheduled to be spudded in April 2010. In December 2009, PetroNeft was awarded the Ledovy licence in the Tomsk region. The licence does not include two producing oil fields – Grushevoye and Lomovoye – that are located in the area. However, PetroNeft believes that two undeveloped discoveries – Ledovoye and Sklonavaya – have significant potential, and under the agreement the company can use the existing infrastructure at the two producing fields, including the Vasyugan-Raskino oil pipeline, to develop other discoveries. Under the agreement, PetroNeft's three-year exploration programme will include the reprocessing of seismic and well data, the acquisition of 750km of new seismic data and the drilling of one well. It is targeting three drilling prospects, which are estimated to hold 55mn bbl of oil in place. The licence, which covers 2,447sq km, is the company's second in the area. Alliance Oil – Summary Independent oil company West Siberian Resources (WSR) merged with Russia-focused mid-sized Alliance Oil in April 2008. The US$2.5bn deal created a vertically integrated player with assets in Russia and Kazakhstan. Alliance's shareholders control 60% of the new entity and WSR's the remaining 40%. As of end-2009, the company had proven and probable (P2) reserves of 526mn bbl, output of 42,700b/d, refining capacity of 70,000b/d and a retail network of 255 stations in eastern Russia. During FY09, the company reported revenues of US$1.73bn and net profit of US$345mn. Revenues were down from US$2.72bn in 2008, while profits were up from US$45.97mn in the previous year. Others – Summary Spanish major Repsol YPF is reportedly in talks with Rosneft about acquiring a 25% stake in the Sakhalin-III project. AIM-listed Urals Energy is a sizeable independent focused on East Siberia. By early-2008 the company held P2 reserves of 822mn boe. However, following the collapse of a loan restructuring deal with Sberbank in the wake of the global financial crisis, Urals was forced to agree to divest to Sberbank its stakes in key Taas Yuriakh Neftegazodobycha and Dulisma operating units in mid-2009 as part of the loan repayment deal. The company’s future now looks uncertain with a hostile takeover or liquidation being a large threat. Its shares were suspended from AIM in July 2009. Ural’s aim to raise output to 75,000b/d by 2013 is no longer feasible. In November 2007 Urals acquired a 35.5% in Taas, in what was at the time one of the largest deals by a Russian-based independent. PetroVietnam is seeking government approval to invest US$614mn in an oil E&P JV with Zarubezhneft. The partners were awarded four oil blocks in western Siberia in May 2008, beating the only other bidder, Rosneft. Russia and Vietnam signed an agreement to deepen E&P cooperation in 2006. The agreement was implemented through the award of the licences in Yamal-Nenets and also extends the life of the © Business Monitor International Ltd Page 62
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