«Ulyanovskneft» is excited about its future

- Alexander, what are the results of business activity of  ОАО « Ulyanovskneft » for 9 months of 2009?

- Today ОАО "Ulyanovskneft" is one of the leading subsoil users in the Ulyanovsk Region. The enterprise develops 30 deposits with the hydrocarbon reserves of 23,5 million tons of oil. Oil production is carried out on the territory of six districts of the Ulyanovsk Region: Nikolaevsky, Novospassky, Melekessky, Cherdaklinsky, Novomalyklinsky and Radishchevsky. Besides, our enterprise provides operator services to all enterprises included in the Ulyanovsk Group of enterprises of «RussNeft».
Today Ulyanovsk Group of enterprises uses the newest methods of oil production and has an advanced oil processing system. The Company invests a lot in modernization of the production infrastructure of the Ulyanovsk enterprises.
Among the major projects of 2008 is the construction of the oil treatment unit of the north group of the deposit and also drilling of the exploitation wells. The overall capital investments in 2008 made 489,3 million Rubles; including those ones that have been spent on the acquisition of oil equipment (341,9 million Rubles) and on drilling programs (102,7 million Rubles).
In 2009 ОАО «Ulyanovskneft» has increased rates of oil production and is going to produce more than 700 thousand tons (with the planned parameters of a business plan in the amount of 696 thousand tons). Production growth will be mainly conditioned due to realization of program on geological and engineering operations. In 2009 "RussNeft" made available significant funds for financing of this program. At the same time, "Ulyanovskneft" continues to carry out exploration works under the existing and new license areas in order to supply the resource base of the enterprise.
Thus, in 2005 "RussNeft" has accrued at an auction the right to develop prospective Pavlovsky license area. In 2006-2007 there was actively carried out supplementary exploration of the said license area. In 2008 in Pavlovsky license area there was begun exploratory drilling and its detailed elaboration. This year there was conducted seismic survey in the amount of 600 km in length. According to preliminary data of geologists deep exploratory drilling seems to be prospective. 

- «Ulyanovskneft» provides operator services to all enterprises included in the Ulyanovsk Group of enterprises of «RussNeft». What projects that are being realized today by the Ulyanovsk Group of OJSC Oil and Gas Company «RussNeft», would you reckon among the strategic ones? What are the prospects of oil production in the region and what are the prospects for business activity of « Ulyanovskneft »?

- To improve its operational efficiency and to create a transparent corporate structure in 2008 Oil and Gas Company «RussNeft» has realized a program on the restructuring of assets. It is based on integration of subsidiary enterprises in blocks on a regional basis. In October 2008 there was carried out reorganization of the enterprise by joining to OAO «Ulyanovskneft» of other subsidiary enterprises of «RussNeft» - ОАО NGDU «Penzaneft» and ZAO SP «Nafta-Ulyanovsk». This reorganization allowed to restructure the entire Ulyanovsk block and to define in its structure two branches: oil and gas production department «Yuzhnoye», which carries out oil production in the south group of fields, and oil and gas production department «Severnoye», which develops the north group of oil-extracting enterprises of the Ulyanovsk Region. It gave positive results and allowed to organize work in a more efficient and transparent level.
It’s no secret that the bulk of oil in the Ulyanovsk Region is difficult to recover.  That’s why we’re constantly looking for the ways to minimize capital and operating costs, and to improve oil recovery by means of application of new technologies and new techniques.
The key points of the production plan of the Ulyanovsk Group of enterprises of "RussNeft" in 2009 are to increase oil rate by means of base production support, support of projects on geological and engineering operations and drilling of new wells.
In this regard the Company has launched a program “On realization of exploration works on development of license areas and extension of fields”.  One of its main aspects is to evaluate the prospects for oil deposits of ОАО «Ulyanovskneft»; definition of oil reserves within the boundaries of license areas, realization of research projects and design works in all fields.
To maintain the planned production level it was decided to conduct exploitation drilling, a considerable amount of the research works, optimization of wells performance, squeeze jobs, introduction into service of the suspended wells and restoration of idling well stocks to production.

-How did the crisis affect operation activity of «Ulyanovskneft? How  successful was the implementation of anti-crisis program?

- There’s no doubt that crisis has had its impact on all industries including oil and gas industry. The current financial and economic situation makes us to limit the implementation of investment and production programs under the conditions of negative pricing environment. However, the crisis has taught the oil workers to be flexible and responsive to changes in oil prices, we are ready to revise our plan and return to a discussion of available investment projects, together with improved market conditions. I would call it the central tendency of the year.
            To ensure the competitive level of prices on oil production there was developed anti-crisis program. The program includes a system of strict control over expenditures and measures on optimization of monetary and commodity flows. Of course, for some positions, our figures are slightly more modest than last year.
And yet I evaluate the results of work of the Ulyanovsk block of OJSC Oil and Gas Company «RussNeft» this year as rather optimistic. For the first nine months of 2009 the enterprises of the Ulyanovsk Group of OJSC Oil and Gas Company «RussNeft» have produced 522.648 thousand tons of oil when according to business plan it was 504.194 thousand tons of oil. The consolidated proceeds of the Ulyanovsk Group of enterprises for 9 months made 2.6 billion Rubles. Production cost of 1 ton of oil reduced by 29% as compared to the same period a year before. At the same time we tried to avoid unpopular measures, such as staff reduction. We initiated additional versatility trainings to the workers of the Ulyanovsk block of “RussNeft”. Despite the crisis, we managed to scale up wages to the staff of production departments.

-What are the relationship between ОАО «Ulyanovskneft» and local authorities, could you call them partnership relations? Do the oil workers manage to participate in the social life of the region, and also to support goodwill projects?

Our oil company takes an active part in numerous social and cultural events, which take place in the Ulyanovsk Region. The relationship between local authorities and management of «Ulyanovskneft» are based on principles of business partnership and mutual understanding. On August 19, 2009 there was signed an agreement «On mutual cooperation between Administration of the Ulyanovsk Region and OJSC Oil and Gas Company «RussNeft». Within the framework of this agreement there was considered to invest 15 million Rubles for financing of social and economic programs and goodwill projects, including 8 million Rubles for the regional charitable programs.
For more than 6 years our company shows support for the development of child and teenage sport in the Ulyanovsk region, acting as the sponsor of child football team «Neftyanik». Within the framework of the said agreement this year for the support of the football team «Neftyanik» there was invested 2,5 million Rubles. Besides, in summer the young football players have got from the oil workers one more gift – a bus.
 We also furnish financial assistance in realization of social programs to 6 Districts, on the territory of which there are situated oil fields of «Ulyanovskneft». One million Rubles will be given to Novospassky, Melekessky and Novomalyklinsky districts, a little bit less money will be given to Nikolaevsky, Cherdaklinsky and Radishchevsky districts.
This summer we have presented 90 trip tickets to the recreation camps to children from large and needy families of Ulyanovsk. Fifty children have spent two weeks in the recreation center of oil workers, which is situated in the picturesque bank of Beloye Lake in the Ulyanovsk Region, and forty children have spent time in the recreation camp “Hobbit”, which is situated on the bank of the river Volga. Every year ОАО «Ulyanovskneft» takes part in the regional charity event «Help to pack to school», which is organized on the initiative of the Governor of the Ulyanovsk region, Sergey Morozov. This year we allocated 100 thousand Rubles to the families, living on the territories, where industrial facilities are situated. We have spent 30 thousand Rubles on the purchase of gym suits for the pupils of Lenin District.

-What is the investment of «Ulyanovskneft» in the formation of local budget? Is “Ulyanovskneft” among the companies, which define  the characteristics of local budget?

- The subsidiary enterprises of OJSC Oil and Gas Company «RussNeft» are among the most dynamically developing enterprises of the Ulyanovsk Region and are also its major tax payers. For 9 months of 2009 ОАО «Ulyanovskneft» has transferred 136 million Rubles to the consolidated budget of the Ulyanovsk Region.

Interviewed by Peter Ivanov.