During May 2-5 the city of Sochi has hosted a circuit session of the Gas Industry Commission for Field Development & Subsoil Use and the 11th Gazprom Coordination Meeting on Geology both chaired by Vasily Podyuk, Member of Gazprom’s Management Committee, Head of the Gas, Condensate and Oil Production Department.

Both events were attended by the heads and specialists of Gazprom’s core departments and production subsidiaries, representatives of Russia’s Natural Resources Ministry, Federal Agency for Subsoil Use (Rosnedra), Federal Service for Nature Use Supervision (Rosprirodnadzor) and industry R&D institutes.

In delivering a key note report Vasily Podyuk emphasized that the Company mainly focused on replenishing the mineral & resource base and building up marketable gas reserves to back production in a long run.

In 2005 Gazprom achieved a record high buildup (607.8 mln tons of coal equivalent) of hydrocarbon reserves since 1993, exceeding previous production rates.

V. Podyuk emphasized that the West-Siberian, Timan-Pechora and Pre-Caspian Regions would be the main exploration targets up to 2010 with prospecting to be intensified in the Ob & Taz Bays of the Kara Sea and the Pechora Sea offshore. Additionally, exploration activities will extend to the East-Siberian and Far East Regions.

Over 2011 to 2020 the mineral & resource base will be mainly replenished in the Arctic offshore and Okhotsk Sea, Krasnoyarsk Territory, Irkutsk Region, Sakha-Yakutia and Sakhalin offshore.

In future, the Arctic regions of West Siberia, East Siberia and the Arctic offshore will remain as exploration priorities with prospecting to be initiated in new, so far unexplored areas of the Siberian and the Far East Federal Districts (northern Evenkia, Sakha-Yakutia, Chukotka, Kamchatka, etc.)

“Reinforcing the mineral & resource base for gas production in Russia is only possible by substantially boosting the scope of exploration, moving it to new geographical areas and enhancing its efficiency. Considerable progress in this sector can be achieved by improving exploration legislation and methodologies, including legislation on mineral resources as well as by increasing the quality of exploratory well construction and testing,” said Vasily Podyuk.

The parties discussed geological exploration directions and its fast development in the Arctic offshore, assessed the potential of East Siberian oil & gas fields and addressed hydrocarbon exploration and development at big depths and under various geological & geophysical conditions.

The meeting emphasized that establishing a reliable resource base on the Russian continental shelf, primarily in the Arctic Seas, was a major development strategy of Gazprom and a crucial element indispensable for the country’s energy security.

The meeting also underlined that Russian offshore gas resources account for 80 per cent of the total domestic hydrocarbons with the bulk concentrated in the Barents and Kara Seas. Implementing a program for geological exploration in the RF offshore will add 13.7 tcm of gas resources up to 2030. Given the explored reserves, this will help form an offshore resource base totaling 17.1 tcm and buoy up by 2030 Gazprom’s total gas production in the Russian offshore to 186.6 bcm per year.

Additionally, the parties addressed issues relative to prospecting activities abroad.

The Commission summed up the results of exploration programs implemented by Gazprom’s subsidiaries in 2005 and the 1st quarter of 2006 as well as looked into exploration projections for 2007 and relevant development scenarios up to 2010. Furthermore, the parties dealt with better organizing and managing geological exploration by Gazprom, adopting a decision to provide more detailed specification of prospecting expenses within Gazprom three-year investment program and budget.

The Commission identified major urgent businesses aimed at raising geological exploration effectiveness.

Reference:

The Program for the gas industry’s mineral & resource base development up to 2030 is one of the main documents identifying Gazprom’s geological exploration strategy and aiming to ensure stable operation of the Company and expanded development of the mineral & resource base.

Under the Program, between 2002 and 2030 Gazprom plans to add not less than 21.6 tcm of gas through geological exploration with liquid hydrocarbon reserves to grow by 3.3 bln tons.

As of May 1, 2006 Gazprom and its subsidiaries held 245 upstream licenses.

As of January 1, 2006 Gazprom’s gas reserves accounted for 29.1 tcm.

Along with conducting exploration in the Russian Federation mainland and offshore Gazprom prospects for hydrocarbons on the continental shelf of Vietnam (Block 112), India (Block 26 in the Bengal Bay), Venezuela (Block 1 and 2 of the Rafael Urdaneta Project) and Uzbekistan (Blocks in the Ustyurt Region). The Company also nurtures plans to participate in oil & gas projects in North Africa.