RussNeft Heightens its 2006 Oil Production Forecast up to 25 Million Tons

Earlier the representatives of the company said that the next year oil output would be more than 20 million tons against 17 million tons in 2005.

“In 2006 25 million (tons of crude) over theterritory of Russia,” said Gutseriev.

According to him, such growth will be backed both by acquisition of new assets, construction of field facilities and start-up of oilfield development, as well as by stimulation of oil production at functional oilfields.

In the coming three years the company is going to take up 25 percent of the retail petroleum product market in Moscow and its province having increased the number of its gas-filling stations from 102 currently to 200.

By the end of next year RussNeft intend to become an international company, inasmuch as they are negotiating their participation in a variety of projects in Azerbaijan, Kazakhstan, Algiers and Libya. And in future the company may raise its oil output to 100 million tons, said Gutseriev.

RussNeft is also negotiating the purchase of 49 percent stake at Transpetrol, a Slovakian pipeline operator, from Yukos . 

The company is looking to be active in using export capacities of its own oil-loading pipe-rack in the Bryansk region by increasing oil transshipment in 2006 up to three million tons with the resources of TNK-BP coming to one million.

It was reported earlier the receipts of RussNeft by the results of 2005 will grow to $3.5 billion against $1.1 billion in 2004, EBITDA is predicted to be twice as much to reach $600 million.

RussNeft believes that in 2006 with the existing oil production level and pessimistic forecast the receipts will be at the level of 2005 and EBITDA will grow to $730-750 million.

ASSETS

Gutseriev said that RussNeft had completed the first stage of vertical integration of the company having bought two refineries and is presently looking to carry out consolidation of regional entities in order to structure assets and lower the cost of administration. 

Last week it became known that RussNeft and TNK-BP had completed a deal in which RussNeft came into possession of Saratovneftegaz OAO, Orsknefteorgsitez, Orenburgnefteprodukt and Neftemaslozavod. In addition to the Orsk Refinery, RussNeft is going to buy 75% stake at ‘Krasnodarsky Oil Refinery-Krasnodarekoneft’ ZAO, having come to an agreement with the shareholders of the refinery.

The head of RussNeft explained his company was to buy out the shares from minority shareholders of this company.

RussNeft is also finalizing a deal on purchasing Udmurtgeologia producing nearly 180,000 tons of crude to replace the share at Volganeft sold to Samara Nafta controlled by former head of TNK and Yukos Semyon Kukes.

According to Gutseriev, reducing shares at Beliye Nochi, Goloil and Kominedra down to 51% is no sale, but a shift of stakes under the control of companies affiliated with RussNeft.

Meanwhile, the shareholders of RussNeft are still in no hurry to conduct the IPO of the shares and not going to sell out the company.

“It has never been my goal to conduct initial public offering, take the money and go abroad… If one day we come to realize that it should be done we’ll just do it,” said the head of the company adding that some proper actions are being taken to prepare the company for IPO, such as negotiations with potential lead banks to float 10-25 percent shares.

Gutseriev informed that he personally controlled nearly 70 percent of RussNeft, the rest shares belonged to his relatives.

In 2003 RussNeft became one of the ten major oil and gas companies of this country having bought up a number of small and medium-scale assets whose purchase was backed up by the old partner of RussNeft, international trader Glencore.