Belkamneft to Invest into One More Udmurt Enterprise

In the end of 2004 there appeared informal news in the press that Belkamneft OAO had come into possession of Udmurt National Oil Company. Last Monday Belkamneft General Director Vladimir Ignatko told information agency Den about the prospects for development of the new asset and Belkamneft plans for the next two years.
Udmurt National Oil Company, or UNOC, was established in March 1998 in the context of a cooperation agreement between the governments of Moscow and Udmurtia. The company explores Debesskoye, Polomskoye, Buranovskoye, Pibalshurskoye, Pyzepskoye, Shadbegovkoye and Kuliguinskoye oil and gas fields with a total of 15 million tons of commercial crude oil recoverable reserves. According to the results of 2004 the company produced 130 thousand tons of crude oil. Integration of the company into the structure of RussNeft allows developing infrastructure of UNOC’s oilfields, building new production facilities and increasing oil output in 2005.
The details of the deal are not disclosed. It is only known that RussNeft fully controls all the operation of UNOC. Thus, UNOC is the second company that has come under operational control of Belkamneft in Udmurtia following company ‘Uralskaya Neft’ joined last spring. The meeting of Belkamneft’s Board held on 28th December 2004 appointed Andrey Maximov, heading Belkamneft’s oil production management, as UNOC General Director.
UNOC is an oil producing company that has been under operational control of state-run republican holding “Udmurt Fuel-Energy Company” starting from 2003 and up to the present moment. Vladimir Ignatko pointed out that in 2004 drilling operations and introduction of new extraction systems became very active compared with the previous years. The main producing entity of UNOC is Debesskaya Neft that extracted 130,000 tons of crude in 2004. The 2005 business plan of the company specifies the last year production volume. Vladimir Ignatko thinks though, that Debesskaya Neft is in the position to increase its oil output.
“In 2005 we’ll try to raise the oil production at this company by 15-20%,” said General Director of Belkamneft.
Having bought UNOC, Belkamneft must accordingly change its capital investment plan. In the opinion of Vladimir Ignatko, the investments are to be increased. UNOC’s development has been stagnated for a long time and now the company needs funds to repair and build roads, pipelines and electric power lines. Still more funds are required to treat crude oil and maintain reservoir pressure. Vladimir Ignatko estimates that some 60 million rubles will be required to carry out all the necessary actions aimed at maintaining the reservoir pressure.
 “In March the board meeting is to be held at Belkamneft, at which final decision will be made regarding investments and salary fund basing on anticipated changes at UNOC. The next year target figure comes to 3.248 million tons. With the 130 thousand tons of UNOC’s crude it will make 3.380 million tons. With the ‘Uralskaya Neft’ included we’ll get to 3.5 million tons which is coming very closely to the figure I mentioned earlier, i.e. 4 million tons,” said Vladimir Ignatko.
In his opinion if everything goes well and the result is obtained, it will tell favorably on the tax proceeds, employee’s salary, and the entire economics of the Republic.
Asset transactions always bring about social issues, such as guarantees to be given to company workers that their jobs and salaries will be preserved, and to administrations of oil producing regions that tax proceeds will be no less.
“Naturally we couldn’t have overlooked these social aspects. In Debesskaya Neft there are 260 employees, all of whom are quite professional people. Definitely they are concerned and keep asking how they are going to proceed; if there will be any staff reduction and so on. Their last year average salary was about 9 thousand rubles. At Belkamneft it is 17.4 thousand rubles. The next year business plan specifies 20.4. Since we are ready to hire 95% of the employees of Debesskaya Neft it is obvious they will have better salaries. When the head of the Debessky district asked me the same questions I also told him that in any case the community would only gain,” said Vladimir Ignatko.  
Belkamneft is going to expand its resource basis through buying new assets and introducing new technologies.
“In the circle of our interests there are license areas which could excellently fall into the production pattern of our company,” summarized General Director of Belkamneft.