5 Aug 2009 13:20

Gazprom Neft slashes geological exploration 28% in H1

MOSCOW. Aug 5 (Interfax) - Gazprom Neft reduced geological exploration 28% in the first half of 2009 compared to the same period of 2008, Boris Zilbermints, the oil company's deputy general director for exploration and production, told Interfax in an interview.

"Both drilling and geophysics were reduced. Naturally, we informed Rosnedra [Russia's subsurface management agency] about this. Nevertheless, from what the old-timers who used to work at Sibneft tell me, 2008 was the first year in the company's long history when all the seismic surveying was fulfilled from start to finish," he said.

The company had said it planned to return geological exploration to the levels of 2008 next year. "Of course, a great deal will depend on the overall economic situation. All the company's geological exploration work has been ranked, and if there are complications with financing, the most promising projects will be selected," he said.

Western Siberia remains a top priority for Gazprom Neft. "When discovering even a small field or new deposit in Western Siberia, we bring them on stream literally in a couple of years, while in Eastern Siberia everything's tied up in logistics. The most important indicator of a project's efficiency is the presence or lack of transportation infrastructure. Since geological exploration activity has declined, Gazprom Neft's plans in such a difficult region like Eastern Siberia have also been adjusted somewhat. By how much I can't say. If you tell me how long the crisis will last, I will tell you by how long the plans for Eastern Siberia have been postponed," he said.

Commenting on new regions outside Russia where the company is operating, Zilbermints said the first major move was the acquisition of a controlling stock interest in Serbia's NIS, although this company is focused more on oil refining and sales. The exploration and production block continues to study opportunities throughout the world, he said.

In the Middle East, Gazprom Neft took part in the first round of tenders for oil and gas fields in Iraq, but failed to receive a contract. If Iraq holds repeat tenders for its fields, the company will definitely take part in them, he said. At present, Gazprom Neft is talking with Iranian National Oil Company on potential participation in projects in Iran. These two countries, however, are mainly offering service contracts, he said.

Gazprom Neft is also actively working on development plans for Africa. The company plans to launch operations as part of the Elephant project in Libya by the end of this year. It also owns stakes in four sea-based blocks in Angola and is in talks with various companies on joining projects on the Angolan shelf, he said. "A group of our specialists is currently holding talks on projects in Equatorial Guinea, where we have discovered some potentially interesting blocks. We are planning to sign a product-sharing agreement in the near future and start carrying out geological exploration this year," he said.

Zilbermints said the company is simultaneously searching for interesting projects in neighboring countries like Gabon and Cameroon, where almost all production is concentrated at sea. "We really need the experience of sea-based production. In Russia, extraction from these types of fields is hardly developed at all. We expect Gazprom Neft will have to develop Gazprom's Prirazlomnoye and Dolginskoye shelf fields. It would be extremely difficult to carry out such serious projects without the appropriate experience," he said.

In Latina America, Gazprom Neft is working in Venezuela as part of the National Oil Consortium and is considering projects on the shelf of Cuba. In the CIS, the company plans to continue paying close attention to opportunities in Kazakhstan and Turkmenistan. "Thus, our upstream M&A specialists are going to have a lot of work in the near future," Zilbermints said.