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August 27, 2013

Bashneft-Polyus starts oil production as part of the T&T project

Bashneft-Polyus, a joint venture of JSOC Basneft and OJSC Lukoil, has started pilot production at the R. Trebs and A. Titov fields in the Nenets Autonomous District. By the end of 2013, production volume is to total about 300 thousand tonnes of oil

‘We created the necessary infrastructure and started oil production in the Nenets Autonomous District in full compliance with previously announced plans and within a time frame that is unprecedented for such large-scale projects,’ said Bashneft’s President Alexander Korsik. ‘This provides further evidence that our team is highly professional and has an extensive experience in implementing large-scale projects outside Bashneft’s traditional operating regions, and that cooperation with our partner, Lukoil, is effective.’

‘Implementation of the T&T project is fully consistent with the Company’s strategic plans to increase hydrocarbon production in the Timan-Pechora oil province and transport hydrocarbons via the Varandey terminal. The start of oil production at the fields proved that cooperation of Russian oil companies within Bashneft-Polyus was highly effective,’ said OJSC Lukoil’s President Vagit Alekperov.

‘We are satisfied with the fact that Bashneft-Polyus has become a new large investor and taxpayer in the Nenets Autonomous District,’ Igor Fedorov, Governor of the Nenets Autonomous District, emphasized. ‘Large-scale field development has shown that the new subsoil user not only takes a responsible attitude to its operations and obligations, but is also actively involved in the social and economic partnership. Implementation of the T&T project will greatly contribute to the development of economic potential of the Nenets Autonomous District.’
As part of preparation for pilot production, in 2011–2013 Bashneft-Polyus, which operates the T&T project, constructed facilities and connected 12 exploration wells at the R. Trebs field to associated equipment. The facilities constructed by the company include: over 40 kilometres of oil-gathering pipelines, about 80 kilometres of power transmission lines, the first stage of the Central Gathering Station (CGS) with the capacity of up to 1.5 million tonnes per year, a metering station, a high-pressure pipeline connecting the CGS at the Trebs oilfield and the metering station at Varandey with the total length of more than 31 kilometres, as well as several auxiliary facilities.

Oil produced at the R. Trebs field is supplied via the pipeline to the metering station at Varandey and then to the Varandey terminal. In accordance with the licence agreement, the amount of oil equal to 42% of produced hydrocarbons will be supplied to Bashneft’s refineries in Ufa.

Currently, as the project operator, Bashneft-Polyus continues implementing the geological exploration programme to determine the geological structure and hydrocarbon reserves of the R. Trebs and A. Titov fields more precisely. For instance, in 2011–2013, 12 exploration wells were reentered within the licence area; three exploration wells were drilled and tested, and two more exploration wells are being drilled; besides, 3D seismic survey totalling 1,350 sq. km was carried out.

Bashneft-Polyus is also preparing to start commercial production at the R. Trebs and A. Titov fields. Thus, in May 2013, production drilling began at three multi-well pads at the R. Trebs field and at two multi-well pads at the A. Titov field; 16 production wells will be located there.

Commercial production at the R. Trebs and A. Titov fields is to start in 2016. Under the project, oil production is expected to reach a plateau of about 4.8 million tonnes per year by 2020.

As of June 30, 2013, capital investments in the T&T project totalled 20.4 billion roubles (less a one-off payment for the licence amounting to 18.5 billion roubles). Overall, the cost of the project implementation is estimated at 180 billion roubles.
Note: JSOC Bashneft obtained a development licence for the subsoil area including the R. Trebs and A. Titov fields in February 2011 based on the order of the Russian Government. In accordance with the Russian classification, total recoverable C1+C2 oil reserves at the R. Trebs and A. Titov fields included in the State Register of Reserves amount to 140.1 million tonnes.




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