23 Jun 2010 14:14

Rosneft, govt to define Vankor production plan for 2011 before Aug

MOSCOW. June 23 (Interfax) - Rosneft and the relevant government bodies will determine the 2011 plan for developing the Vankor oil field before August 2010, Rosneft Vice President Mikhail Stavsky told journalists.

The company is discussing the issue with the Finance Ministry and the Energy Ministry, taking into account possible introduction of a discounted export duty on oil from the field, to replace the zero import duty currently in effect, he said.

Oil production from the field in 2010 will total 12.5 million tonnes, in according to company forecasts. Stavsky did not provide a forecast for production in 2011.

However, infrastructure at the field is sufficient to handle production of about 14 million tonnes, he said. Additional infrastructure will be needed to further increase production.

"From the geological standpoint, everything is fine with Vankor. Wells are being drilled, reserves prepared. But from the standpoint of infrastructure, in order to boost production new pads must be built, new facilities. We can pump about 14 million tonnes currently. Further construction will require money," he said.

Those issues are being examined by the working group formed jointly with the Finance Ministry and the Energy Ministry. Vankor is the project making the biggest contribution to growth in Russian oil production, he said. "There is already the understanding that production must not decline," he said.

Rosneft is adhering to a 20% rate of return on the project, he said.

Rosneft President Sergei Bogdanchikov said previously that Vankor, located in Krasnoyarsk territory, would produce 17 million tonnes of oil in 2011.

A zero export duty has been in effect for oil from 22 fields in Eastern Siberia since January 2010, and all that time the Finance Ministry and Energy Ministry have been debating the usefulness of that tax break. A new method supported by the government presidium and taking effect from July 1 sets the size of the oil export duty at 45% of the amount by which the actual price exceeds $50 per barrel. Once the rate of return for a project reaches 15%, a company would have to pay 100% of the regular export duty.

The Vankor field could achieve a 15% rate of return in 2011, making it the first of the Eastern Siberian fields to lose its eligibility for the reduced export duty.