INTERNATIONAL
PROJECTS

In December 2009, in the second licensing round, Gazprom (as part of a consortium) obtained the rights to develop the Badra field. As an operator, the Company holds a 30% interest. The consortium comprises: Gazprom Neft, Kogas (Korea), Petronas (Malaysia), and TPAO (Turkey).

Gazprom Neft’s share of the project is 30%, while Kogas has 22.5%, Petronas 15%, and TPAO 7.5%. The Iraqi government is represented by Oil Exploration Company (OEC) with a 25% interest.

The service contract was signed on 28 January 2010 and became effective on 18 February 2010.

PROJECT GEOGRAPHY

The Badra oil field lies in the province of Wasit in eastern Iraq.

CURRENT STATUS (2013)

  • Well BD4 drilling completed.
  • Well BD5 drilling completed and under development.
  • Drilling of six more production wells contracted to Zhongman Petroleum and Natural Gas Group Co., Ltd. (ZPEC).
  • EPC-contract entered into with Samsung for the construction of gas infrastructure.
  • EPC-contract entered into with CPP for strategic pipeline junction.
  • EPC tender issued for gas export pipeline.
  • Field service contract signed with Petrofac International (UAE) Ltd.

FORECAST UNTIL THE END OF 2014

  • Complete final preparation plans for field development.
  • Put into operation the “A” oil treatment process line (CPF), infield pipelines, export pipeline, wells BD4 and BD.
  • Commence commercial production (next year’s target production is 15,000 barrels per day).
  • ommence production drilling.

Libya (Northern Africa) ranks among Gazprom Neft’s priority regions because of to its predominantly onshore production, significant potential to increase the resource base, established logistics, and developed infrastructure.

The Elephant field lies in western Libya. Its recoverable oil reserves are estimated at 100 million tonnes. The field is fully equipped and has power supply utilities and facilities for oil treatment and transportation to its own onshore terminal.

In June 2011, Gazprom Neft signed an Option Agreement and obtained the right (but not the obligation) to acquire under certain conditions by 22 December 2012 Eni’s 33% share in the consortium of foreign companies developing the field under equal control with the Libyan national oil company, NOC. On 21 December 2012, Gazprom Neft notified Eni duly and in good time of its intent to exercise this option to purchase a stake in the project.

In January and September 2013, OJSC Gazprom Neft delegations, supported by the Russian government, consulted with NOC management and the Oil Ministry in Libya to obtain approval to join the project. These consultations and negotiations between Eni’s management and the Prime Minister of Libya confirmed that, in principle, the Libyan party had no objections to Gazprom Neft joining the project; however, the final position was still to be determined.

Due to the difficult political and military situation and unstable new government in Libya in 2013, the Libyan party was unable to come to a conclusion concerning Gazprom Neft’s acquisition of a share in the Elephant project. Given these circumstances, Gazprom Neft and Eni decided in 2013 to extend the option until 31 December 2014.

PROJECT GEOGRAPHY

The Elephant field lies in western Libya.

In accordance with the Memorandum of Understanding between OJSC Gazprom Neft, OJSC Oil Company Rosneft, OJSC LUKOIL OJSC Surgutneftegaz, and OJSC TNK-BP Holding, the parties acquired share capital of the National Oil Consortium (NOC) on 23 June 2009. Since the Junin-6 consortium project, implemented as part of an intergovernmental treaty in Venezuela, is an oil production project, Gazprom Neft acquired the share capital of NOC for implementation following a decision made by Gazprom management.

On 30 March 2010, LLC National Oil Consortium and Corporation Venezolana del Petroleo (CVP), a subsidiary of the Venezuelan government-owned oil company (PDVSA), established Petro Miranda — a joint venture to develop the Junin-6 heavy-oil field in the Orinoco River basin. NOC has paid the first part of a USD 600 million bonus to the Bolivarian Republic of Venezuela for the right to become a member of the joint venture.

On 27 April 2010, the NOC Board of Directors designated OJSC Gazprom Neft as the Junin-6 leader, with responsibility for its technical implementation, while OJSC TNK-BP Holding was designated as its partner for the organisation and implementation of the project.

On 27 February 2012, drilling of the first stratigraphic well J6-D12 commenced as part of additional exploration work of the Junin-6 block. Oil-wet core samples were obtained and the analysis showed a highly accurate producing depth forecast and a 45% increase in the well’s capacity.

On 16 May 2012, the NOC Board of Directors approved the Early Production project, subject to the Venezuelan party’s acceptance of the key terms of the project implementation.

On 27 September 2012, an official event was held in the Junin-6 block to launch the first horizontal well DB1-01 and discovery of the first oil at the Junin-6 field (as part of the Early Production project). Chief executives of the Russian companies participating in the NOC headed, by I.I. Sechin, Chairman of the NOC Board of Directors, and the chief executives of Venezuelan PDVSA, headed by R. Ramirez, Minister of the People’s Power for Oil of the Bolivarian Republic of Venezuela, took part in the event.

PROJECT GEOGRAPHY

The Junin-6 block lies in the Bolivarian Republic of Venezuela in the heavy-oil belt of the Orinoco River basin.

PROJECT CHARACTERISTICS

Pilot operation (2012) and commercial operation of the field (in 2015, once the final investment decision has been made, following the results of the additional block exploration).

Current Status (2013)

  • Ground and access for the construction of the stratigraphic well completed.
  • 3 stratigraphic wells constructed; core samples taken from one of them.
  • One multilateral well for horizontal production well borehole navigation constructed.
  • 4 horizontal wells put into operation (with an average daily oil influx of about 370 tonnes, including one well commissioned in 2012).
  • Transfer of project management to OJSC Oil Company Rosneft still in progress.
  • Upgrading of infrastructure and basic engineering upgrading is underway.

FORECAST UNTIL THE END OF 2014

  • Implement the contractual plan for additional exploration on a step-by-step basis (completion of the first stage of exploration).
  • Continue implementation of the Early Production project.
  • Construct pipelines as part of the Early Production project.
  • Continue motor road and bridge construction work.
  • Upgrade block and ground infrastructure through basic engineering.

In August 2012, Gazprom Neft took part in new hydrocarbon reserve exploration and development projects in Iraq. The Company signed two production-sharing agreements (Production sharing agreementPSAs) with the Kurdistan government, covering the Garmian and Shakal blocks, with a total area of 2,054 km2, located in south-west Kurdistan. In February 2013, a PSA for 1,519 km2 of the Halabja block was signed.

Gazprom Neft’s share in the Garmian licence blocks is 40%, and the Company is set to become the licence block operator from 1 January 2015. Gazprom Neft is the project operator for the Shakal and Halabja licence blocks, in which the Company has an 80% share. The share of the Kurdistan Regional Government in all agreements is 20%.

The total payment to be made by Gazprom Neft to join the projects, including compensation for historical costs incurred, will amount to some USD 390 million. The investments in geological surveys in the three projects prior to 2015, made by Gazprom Neft, are estimated to amount to at least USD 1 billion. The PSA model allows for the compensation of costs incurred by the investor once field production has started.

According to Gazprom Neft estimates, the in-place reserves of the three licence blocks (estimated from resources) are in excess of 1,300 million tonnes (approximately 9.7 billion barrels of oil). It is planned to achieve maximum production of at least 30,000 tonnes (230,000 barrels) per day at the licence blocks within eight years.

Currently, a geological survey is still in progress. This is to be completed no later than 2015, followed by the start of production in Kurdistan.

PROJECT GEOGRAPHY

The south-western part of Kurdistan in east Iraq.

CURRENT STATUS (2013)

  • 277 km2 of 3D-seismic surveying at the central part and 219 km of 2D-seismic surveying at the south-east of the Shakal block completed; 350 km2 of geoelectrochemical and magnetic prospecting surveys completed.
  • Two exploration wells up to 600 metres deep bored and static hydrocarbon reserves discovered jointly with WesternZagros in the Upper Bakhtiari deposits at the Garmian block; drilling of two more exploration wells – Hasira-1 and Baram-1 commenced. In addition, 100 km of 2D and 572 km2 of 3D seismic surveying completed in the northern and southern parts of the block, as part of the extensive exploration programme.

FORECAST UNTIL THE END OF 2014

  • According to the 2014 exploration program, 100 km2 of 3D-seismic surveying will be completed in the north-western part of the Shakal block and two exploration wells will be constructed.
  • Drilling and testing of two converted wells – Hasira-1 and Baram-1, and the construction of the exploration well, Qulijan-1, at the Garmian block to be completed jointly with WesternZagros. Additional exploration wells – Qula-1 and Chwar-1 to be bored.
  • 1,000 km of 2D-seismic survey, a geoelectrochemical prospecting survey along the seismic profiles and the start of the preparation for drilling the first exploration well are planned at the Halabja block.
  • Further development Gazprom Neft in the most promising oil and gas regions of Kurdistan is planned.