MIOGE 2009 DAY 2: TNK-BP, Rosfneft and Others Going Foward in Spite of the Crisis

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The Vice President of TNK-BP's Exploration Division says that the company's exploration efforts will not contract due to the crisis, and that 250 new exploration wells will be drilled in the next five years. Rosneft's Deputy Director of Science and Technology said that his company is continuing to improve its technological toolset, adding that Rosneft unveiled five new proprietary technologies last year and has put 16 into use already this year. General Director of the Company VNIPINeft Vladimir Kapustin said that Russian domestic refining capacity is 40 percent finished with the changes that will be required under the Euro-3 higher octane fuel requirements taking effect in 2011.

Sergey Ostapenko, VicePresident of TNK-BP's Exploration Division, spoke of three major regions where TNK-BP, third in Russia by production volume, will be exploring.

First is the Khanty-Mansisk Autonomous Region, where the company has 31 concerns, of which 21 are in the Samara, Saratov, and Orenburg Districts. The second place is the Uvata District, with 27 exploration sites, Eastern Siberia, the Yamalo-Nenets Autonomous Region, and Kovuytka. The third place is Timano Pechora and the Astrakhan District, with 3 and 4 concerns, respectively.

In the past five years proven oil reserves have grown by four million tons and the efficiency of exploratory wells reached 75 percent. In Orenburg District that efficiency has been 100 percent for two years now; not one well has come up dry.

In 2004, in conjunction with the company Western Geco, TNK-BP set up seimic data processing centers in Moscow and Tyumen.

The General Director of VNIPINeft Vladimir Kapustin shared an array of observations with the Congress. Among them was that although the volume of refined products in Russia grew from 2006 to 2008, from 217 to 236 tons, the growth came from the refining of low value fuels for export. In fact, there was no growth in highly-refined products, and that is good for Europe but not Russia.

A decision has been made to equalize the export tariff structure for so-called light and dark exports, which are now set at 36 and 70 percent, respectively. Until that decision takes effec, low-grade fuels will be more profitable for refineries.

As Russian refining capacity is only 40 percent prepared for the Euro-3 requirements, its safe to say the swith to producing cleaner fuels will not take place here.

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