14 Apr 2020 16:42

Gazprom Neft, Shell close deal to add another license to Salym JV portfolio

MOSCOW. April 14 (Interfax) - Gazprom Neft and Shell have closed a deal to add another license, Salymsky-2, to the portfolio of their Salym Petroleum Development (SPD) JV in the Khanty-Mansiysk Autonomous District, Gazprom Neft said in a statement.

The partners agreed that Salym Petroleum Development N.V. would buy from Gazprom Neft a 100% stake in LLC Salymsky-2, to which the license to the Salymsky-2 property will be transferred. SPD will also be the operator of the project to develop the new asset.

The 376 km2 Salymsky-2 property borders the West Salym, Upper Salym and Vadelyp fields, which SPD is already developing. The new section does not have its own infrastructure, but there will be synergy from its proximity to the existing operations.

Two prospecting and appraisal wells have so far been drilled at Salymsky-2 and 3D seismic information is being interpreted.

SPD has been developing the Salym Group of oilfields with recoverable reserves of 140 million tonnes since 2003.

SPD expects to be producing 7 million tonnes by 2025, although previously, a figure of 7 million tonnes by 2020 was mentioned. The JV produced 6.136 million tonnes of oil in 2018 and raised production 1.6% in 2019. Salym production had falling for a number of years.

Gazprom Neft said on April 14 that Shell had notified it that it would not pursue the completion of another deal, to create a joint venture through Meretoyakhaneftegaz due to the challenging external environment.

Gazprom Neft will continue developing those license blocks previously intended to form part of the joint venture - the Meretoyakhinskoye field, the Tazovsky and Severo-Sambrugsky blocks, and two Zapadno-Yubileiny blocks in the Yamal Nenets Autonomous District - independently, in accordance with the previously approved work plan, on which basis development of and commercial production at the Tazovsky field is expected to start by end-2020.

This decision by Shell with regard to this transaction will not impact its commitment to developing its business in Russia, including cooperation with Gazprom Neft, on current and potential new opportunities.