RussNeft is Making for Drilling

Yesterday President and main owner of RussNeft Mikhail Gutseriev came to Perm for a visit and had a close door meeting with Governor of the Perm region Oleg Chirkunov. According to Mr. Gutseriev, he discussed with the governor development of a glass-work in Berezniki. RussNeft President informed about the intention of Russian Soda Company (75% stake is controlled by RussNeft and 25% by General Director Valery Zakoptelov) to invest 600 million roubles in setting up soda ash production in 2006 and more than $100 million in the construction of a glass works in Berezniki to produce architectural glass using the technology of company PPG Industries, Inc. (Pittsburg, Pennsylvania, USA).

However, according to a source close to Gutseriev, the main issue of the negotiations with the governor was participation of the company in the oil sector of the Perm region. The source informed that RussNeft was seeking after closer involvement in the upstream activities over the area of Prikam’e where Lukoil-Perm OOO is number one. Mikhail Gutseriev confirmed that he was interested in the upstream market of the Perm region and said that he was concluding negotiations with Oil Company Lukoil on acquiring Uraloil OOO, a subsidiary of Lukoil-Perm OOO. He declined to disclose any details of the deal referring that the negotiations were not yet over. Furthermore, Mikhail Gutseriev informed the Kommersantъ that he was going to be more active in the auctions for the Perm oilfields. “We are interested in exploration and drilling,” clarified Mr. Gutseriev.

Kommersatъ
In the structure of Oil Company RussNeft OAO there are 30 upstream entities, 3 oil refineries, a retail network of gas-filling station found in 17 regions of Russia and CIS. The company develops more than 170 oil and gas fields. RussNeft’s total recoverable reserves exceed 630 million tons. The company produces 17 million tons/year of crude oil. It is run by Mikhail Gutseriev and his members of the family. Uraloil OOO develops 35 oil and gas fields (most with difficult oil) in 17 administrative areas of Prikam’e. In 2004 Uraloil enterprises produced 551 thousand tons of crude oil, in 2005 – 545 thousand tons. The 2006 plan provides for drilling 9 new wells which will increase the production up to 582 thousand tons.
This is just to remind that in the beginning of 2006 it was reported that RussNeft was going to acquire Uraloil in exchange of 34% stake at Geoilbent (former asset of Yukos). Lukoil owns 66% of Geoilbent and is going to get hold of the minority stake in exchange of Uraloil. It should be noted that the nearest auctions will be held just for the oilfields in Berezniki where there is already RussNeft-controlled Russian Soda Company present. Director the Perm Region Territorial Office of the Federal Subsurface Management Agency Andrei Belokon’ informed the Kommersantъ that this summer they were going to offer for sale several oilfields, of which the two biggest ones were found in the area of Verkhnekam’e. They are the oilfield named after Arkhangelsky with nearly 7 million tons of C1+C2 reserves and Kondassky subsoil area with 20 million tons of reserves but wild as no drilling has ever been done there. The official pointed out that RussNeft had not participated in Prikam’e auctions before.
Finam analyst Timur Hajrullin told the Kommersantъ the acquisition of Uraloil was quite in line with the strategy of the company. “RussNeft is much different from other oil companies. It was created later when there was no resource basis available,” clarified the analyst. “At the same time the company has a significant financial resource.” According to the analyst, in 2005 the company bought a number of stakes from TNK-BP and continues to buy any oil assets available at the market.

Alexandra Pokrovskaya,
Nadezhda Emelyanova