PROJECTS IN RUSSIA

increasing
the resource base
through new projects

PROJECT HISTORY

The Novoportovskoye oil-gas condensate field was discovered in 1964.

In 2011, in order to consolidate this field within OJSC Gazprom Neft, the licence and assets of the Novoportovskoye field were moved to LLC Gazprom Neft-Novy Port, which had been established as a result of the reorganisation and separation from LLC Gazprom Dobycha Nadym.

In December 2012, Gazprom Neft paid RUB 6.3 billion to acquire the share capital of Gazprom Neft-Novy Port, taking a 90% controlling stake in the company. OJSC Gazprom remains the second owner of LLC Gazprom Neft-Novy Port. The difference between the money paid (RUB 6.3 billion) and the historical cost (RUB 4.9 billion) is reflected in the additional paid-up capital for the year ending 31 December 2012. In spring 2011, Gazprom Neft confirmed the potential for year-round offshore oil export from the field — the atomic icebreaker Vaigach made a test voyage from the port of Sabetta (north-east of the Yamal peninsula) to the theoretical location of the Novoportovskoye oil field, located 400 km south of Cape Kamenny. The ice-free period in this part of the Gulf of Ob lasts three months, from July to September.

In 2012, exploration wells were tested ,and the results significantly exceeded expectations. The first construction stage of a central oil processing facility (CPF) was completed; an oil loading terminal was built to facilitate winter oil shipments; well pad No. 2 was equipped, and the pipeline from well No. 146 to the CPF was constructed and tested. This year, a gas engine power plant and well cluster No.1 dumping are being installed, an in-field flow line and a high voltage power line are under construction, and a site for the construction of an oil depot in the area of Cape Kamenny is being developed.

Pilot development of the field began in December 2012.

Depending on the geological structure of the formation, Jurassic deposits (41% of reserves) will be developed by using two types of operating wells: controlled directional wells with fracturing, and horizontal wells. Neocomian deposits (formation of the NP group, representing 36% of reserves) will be developed by using horizontal wells, with a horizontal area of between 1,000 to 1,500 metres.

COMMISSIONING

Start of pilot production – 2012; start of commercial production – 2015.

There has been a great deal of talk recently about the economic future of Russia lying in the Far North. With huge mineral reserves, including hydrocarbon, and the shortest and the most efficient transport route from Europe to Asia, theArctic continues to be a vital hub for the country.

But for Gazprom Neft, the areas beyond the Arctic Circle do not relate only to the future: there are already many successful high-latitude projects. Commercial production is expected to begin soon at the Novoportovskoye field and Messoyakha cluster, where wells are being actively drilled and the necessary infrastructure is under construction. We have developed a unique concept of using the Northern Sea Route for year-round oil export; a world first. The exploration and development of Arctic areas is a key goal of Gazprom Neft’s 2025 Development Strategy. As the first to enter the region, we are laying the operational foundations at the Arctic shelf for the entire industry.

Vadim Yakovlevв

First Deputy CEO, Gazprom Neft

PROJECT GEOGRAPHY

The Novoportovskoye oil-gas condensate field is the northernmost field of the Yamal oil-gas condensate fields and is located to the southeast of the Peninsula in the YaNAD (250 km north of Nadym and 30 km from the Gulf of Ob coast). Payuta is the nearest railway station around 200 km away (by winter road only).

PROJECT HISTORY

The Messoyakha project’s main logistical difficulty is the absence of any oil/gas transmission network. In order to resolve this, the construction of a main Zapolyarye-Purpe pipeline 500 kilometres long is required. The design and construction of this pipeline is being carried out by OJSC AK Transneft. Currently, the linear pipeline portion is being constructed (first stage) and the design and evaluation documentation is being developed for the second and third stages of construction. The first stage commissioning is planned for Q4 of 2014, the second stage in Q4 of 2015, and the third stage in Q4 of 2016. Along with construction of the main Zapolyarye-Purpe pipeline, LLC Gazpromneft-Development will design a pumping pipeline from the Vostochno-Messoyakhskoye gas-oil condensate field to the initial pump station-1 of the main Zapolyarye-Purpe pipeline. There are plans for the first oil from Messoyakha to be connected to the main trunk pipeline system in Q4 of 2016.

In addition, OJSC Gazprom Neft is negotiating a favourable beneficial tax treatment for the new fields, taking into account the programme for the complex development of oil and gas deposits in the YNAD and the northern part of the Krasnoyarsk Territory until 2020, which is currently under consideration by the Russian government.

Gazprom Neft and TNK-BP agreed to establish a joint venture to develop the Zapadno-Messoyakhskoye and Vostochno-Messoyakhskoye fields in the Yamalo-Nenets AD. Gazprom Neft is acting as the project operator. The decision to establish the JV is based on the immense scale of the project and the complexity of its implementation. By managing the assets directly, the shareholders will be able to make swift key decisions based on the experience and technology of the two largest vertically integrated oil companies (VIOCs).

Thanks to its acquisition of TNK-BP, Rosneft has become a new partner inthe project.

In October 2012, the first oil was obtained from the Vostochno-Messoyakhskoye field as a result of pilot operations. During the preparation for pilot development of Messoyakha in 2012, Gazprom Neft drilled six production wells and two water wells at well pads No. 1 and No. 2. Of the six production wells, five were completed, with a horizontal drilling length of over 600 metres. In addition, the drilling of four geological survey wells was completed as part of the 2012 geological survey well programme, and 42 facilities were tested, against a target of 34.

KEY PROJECT CHARACTERISTICS

Recoverable C1 and C2 oil reserves at the Messoyakhskiye fields are estimated at 465 million tonnes of oil and 175 billion cubic metres of gas, making them the largest fields in the district. There are plans to begin commercial production at the Messoyakhskiye fields in 2016, with peak oil production in 2023-2024 and peak gas production in 2022. Maximum production is estimated to be 12 million tonnes of oil equivalent per year. Most of the reserves are heavy, highly viscous oil.

PROJECT GEOGRAPHY

The fields were discovered in the 1980s and are the northernmost identified onshore fields in Russia. The Messoyakha group is located on the Gydan Peninsula in the Taz region of the Yamalo-Nenets Autonomous District, 340 km north of the city of Novy Urengoy in the Arctic climate zone, in a region with undeveloped infrastructure.

PROJECT HISTORY

The project includes licences for the development of the Prirazlomnoye field (owned by LLC Gazprom Neft Shelf, licence series ШПЧ № 14758, expiring in March 2043), the most prepared for commercial development on the shelf field of the Timano-Pechorskaya petroleum province and a part of Gazprom Neft’s development strategy.

Project implementation will serve as the basis for further development of hydrocarbon deposits in the Arctic zone of the Russian continental shelf.

The Prirazlomnoye field was discovered in 1989. It is located at the south-eastern shallow marine shelf of the Barents Sea (in the Pechora Sea) is 18.0-20.5 metres deep, and next to the undeveloped coast of the Bolshezemelskaya Tundra in the exclusive economic area of the Russian Federation.

The field is situated 55 kilometres from the coast, north of the Varandey village, 240 kilometres northwest of the Naryan-Mar port on the Pechora River and 980 kilometres east of Murmansk.

The project includes the construction of an offshore ice-resistant fixed platform, onshore infrastructure, oil spill response (OSR) system, creation of a maritime transportation and processing system, drilling of 20 production wells, 13 injection wells and a well for slurry utilisation.

PROJECT OBJECTIVES

  • Creation of an economically efficient asset
  • Development of competencies for field production on the Arctic continental shelf

The past year will, without doubt, go down in the history of our company (and of the entire Russian oil sector), as the year when oil production began on the Arctic Shelf, at the Prirazlomnaya platform. Our company has pioneered oil production on the Arctic Shelf, and the significance of this news is hard to overestimate.

Alexander Dyukov

Chief Executive Officer OJSC Gazprom Neft

PROJECT GEOGRAPHY

The Prirazlomnoye field is located at the south-eastern shallow marine shelf of the Barents Sea (in the Pechora Sea) at a depth of 18.0-20.5 metres, adjacent to the undeveloped coast of the Bolshezemelskaya Tundra in the exclusive economic area of the Russian Federation.

PROJECT HISTORY

The total reserves of the Chona project are estimated at 125 million tonnes of oil and 225 billion cubic metres of gas. The Company is partnering with the Japanese firm, JOGMEC, at the Ignyalinskoye field, but is working independently at the other two fields. The Company is complying fully with the terms of the licence agreements. In the Chona project, LLC Gazprom Neft Angara was the first Russian company to use the innovative UniQ exploration technology developed by Schlumberger. UniQ is a unique system of geophysical equipment and computer software designed for high-resolution seismic data collection. In 2013, the UniQ seismic system was used in over 350 square kilometres in the Tympuchikansky and Vakunaisky areas. As a result, 16 times more data was collected than would have been possible using traditional 3D seismic survey methods.

In 2013, the total amount of survey work carried out on the three fields of the Chona project comprised 500 square kilometres of 3D seismic survey, 2,500 linear kilometres of electrical exploration, the drilling of four exploration and appraisal wells, and repeat testing of four previously drilled wells. Pilot development work commenced at the Tympuchikanskoye field and trial production is underway. The design for the Chona project’s surface infrastructure was developed.

The main focus for 2014 is to carry out research and prepare for the pilot development work. In 2014, 3D seismic surveys will be carried out on 900 square kilometres (including 600 square kilometres using UniQ technology), with up to 4,500 linear kilometres of electrical exploration. Plans include the drilling of five exploration and appraisal wells, repeat testing of one previously drilled well, and the start of commercial test production at two wells. Work will also begin this year to locate sand quarries and rocky soil to provide materials for site access roads. Sites will be prepared for the construction of the main production facilities during 2016–2018, including oil treatment facilities, a commercial oil pipeline, an acceptance station, and energy supply facilities.

PROJECT GEOGRAPHY

The Company is now carrying out exploration work as part of the Chona Project in three fields – Ignyalinskoye, Tympuchikanskoye and Vakunaiskoye, all of them located on the border between the Irkutsk Region and the Republic of Sakha (Yakutia).

“Developing shelf projects is a strategic goal for Gazprom Neft. Continuing geological exploration at the Dolginskoye oil field will enable Gazprom Neft to expand its competencies in implementing shelf projects,” said Gazprom Neft First Deputy CEO Vadim Yakovlev.

PROJECT HISTORY

OJSC Gazprom’s oil business strategy was approved in 2006. The strategy planned to consolidate all of OJSC Gazprom’s oil assets, including those on the Russian shelf, within the Gazprom Neft Group.

As part of the decision taken to consolidate the Dolginskoye oil field, in 2011 OJSC Gazprom Neft, together with leading Russian and international companies, carried out a Feasibility Study and Proposals for the Commercial Development of Dolginskoye Oil Field to evaluate the asset’s geological and economic potential.

In June 2012, the Dolginskoye Oil Field Commercial Development Programme was approved as OJSC Gazprom Central Commission’s development concept for Subsurface Resources Use and Licensing Management.

In September 2012, OJSC Gazprom and LLC Gazprom Neft Sakhalin finalised a contract for geological exploration work, commercial development, and the field’s operation.

Pursuant to the decision of the Federal Agency for Sub-surface Use dated 5 September 2013, the licence for sub-soil use at the Dolginskoye Oil Field was consolidated into Gazprom Neft’s subsidiary, LLC Gazprom Neft-Sakhalin, which meets all statutory requirements to carry out shelf operations.

As part of its licence obligations, preparation for the construction of exploration wells during the 2014 and 2015 navigation periods is underway.

It is anticipated that, once the field is put into operation, the first oil will be obtained in 2021.

PROJECT GEOGRAPHY

The Dolginskoye oil field is located on the shelf of the Pechora Sea, 80-110 kilometres from the shore, and was discovered in 1999. The depth of the sea in the area of the field ranges from 40-55 metres. A total of over 11,000 linear kilometres of 2D seismic surveys has been conducted at the field, as well as 1,600 square kilometres of 3D seismic surveys. The drilling of three exploratory wells was completed, including two Severo-Dolginskaya wells and one Yuzhno-Dolginskaya well. Currently, the field’s recoverable reserves are estimated at over 140 million tonnes of oil equivalent.

KEY CHARACTERISTICS OF THE PROJECT

In 2017, the gas production capacity at the SeverEnergia field will exceed 31 billion cubic metres per annum. Natural gas from the company’s fields will be delivered to the Unified Gas Supply System, and the gas condensate will be transported via the condensate pipeline to the Yurkharovo-Purovsky Gas Condensate Stabilization Plant. Further plans at the Samburgskoye field include the development of oil rims and a link to the Zapolyarye-Purpe oil pipeline, which is currently under construction. The successful launch of the Samburgskoye field is the result of international cooperation in the oil and gas industry.

PROJECT HISTORY

In July 2010, OJSC Gazprom Neft and NOVATEK announced the establishment of a new joint venture, LLC Yamal Development, to implement joint projects to develop oil and gas condensate fields in the Yamalo-Nenets Autonomous District.

By the end of 2013, LLC SeverEnergia was a Russian-Italian entity, with 51% of its shares owned by LLC Yamal Development — a joint venture established by OJSC NOVATEK and OJSC Gazprom Neft under equal control. The 49% share of the authorised capital of LLC SeverEnergia was held by a joint venture between the Italian energy providers Eni (60%) and Enel (40%), Arctic Russia B.V.

In November 2013, LLC Yamal Development entered into a binding agreement with Eni to acquire a 60% share in Arctic Russia B.V., which held 49% of the authorised capital of LLC SeverEnergia. The deal amounted to USD 2,940 million. After the transaction was completed, LLC Yamal Development’s share in LLC SeverEnergia increased to 80.4%.

In December 2013, OJSC NOVATEK reported that it was also entering into an asset exchange contract with OJSC Oil Company Rosneft. The 51% share in OJSC Sibneftegas, owned by NOVATEK, will be exchanged for a 40% share of Rosneft in Arctic Russia B.V. The non-cash transaction will be completed once the required approvals have been obtained.

The outcome of the above transactions resulted in an increase in NOVATEK’s effective share of the authorised capital of LLC SeverEnergia to 59.8% as of 15 January 2014. OJSC Gazprom Neft’s share amounted to 40.2%.

In April, 2012, the first stage of the Samburgskoye oil and gas condensate field owned by SeverEnergia was officially put into commercial operation. The Samburgskoye field is the first of SeverEnergia’s fields to produce hydrocarbons. The gas production capacity of the first stage is 2.3 bcm per annum. The second stage, which shares the same capacity, was launched in December 2012.

INFRASTRUCTURE AND TRANSPORTATION

  • At the beginning of 2014, the gas and condensate treatment and transportation facilities were put into operation only at the Samburgsky licence area (Valanzhinskaya deposit).
  • The areas are located 60-100 kilometres from Novy Urengoy.

CURRENT PROJECT STATUS (2013)

  • 64 production wells drilled.
  • 3D field work at the Yevo-Yakhinskoye and Samburgskoye fields completed. Data is being processed and interpreted.
  • The second stage of Samburgskaya GTP launched (aggregate capacity of the first and second stages is 4.3 bcm per annum).
  • The first stage of OTU launched at the Samburgskoye field.

PROJECT GEOGRAPHY

The Samburgskoye field is located in the Yamalo-Nenets Autonomous District, within the Samburgsky licence area, the reserves of АВС1+С2 natural gas being 1,263.7 mn BOE and those of liquid hydrocarbons (oil and gas condensate) 918.4 mn BOE. The Samburgsky licence area also comprises the Urengoyskoye, Severo-Yesetinskoye and Vostochno-Urengoyskoye oil/gas/condensate fields. As of 1 January 2014, the total АВС1+С2 reserves of the Samburgsky licence area are estimated at 8,969.9 million BOE. In addition, LLC SeverEnergia holds licences in the Yaro-Yakhinsky, Yevo-Yakhinsky and Severo-Chaselsky licence areas. As of 1 January 2014, LLC SeverEnergia’s natural gas and liquid hydrocarbon reserves amounted to 7,865.8 million BOE and 5,070.2 million BOE, respectively, according to the Russian АВС1+С2 categories.