While the majority of Gazprom Neft’s assets are located in Russia, the company is also active on the international markets.
Gazprom Neft’s most important international asset is Serbian energy company Naftna Industrija Srbije (NIS). Gazprom Neft has a 56.15% interest in NIS, with 29.87% being held by the Republic of Serbia, and the remaining shares being held by various individuals.
In the 10 years since Gazprom Neft’s acquisition of NIS it has gone from being a loss-making enterprise to becoming a successful company and one integral to the Serbian economy, being one of the company’s largest employers and the country’s single biggest taxpayer. NIS contributes more than EUR1 million to the Serbian budget every year — some 13–15% of total budgetary revenues.
NIS is now one of the most important vertically integrated energy companies in South—East Europe. The NIS Group is involved in oil and gas exploration and production in Serbia, Bosnia and Herzegovina, and Romania. NIS’ total production volumes in 2018 reached 1.3 million tonnes of oil equivalent (mtoe). Refining volumes at the company’s Pančevo plant reached 3.8 million tonnes in 2018.
Retail sales of petroleum products are handled by filling stations operating under the Gazprom and NIS Petrol brands. More than 400 filling stations are now under NIS management throughout Serbia, Bosnia and Herzegovina, Bulgaria and Romania.
The company owns Serbia’s only high-tech bitumens plant; Serbia’s aviation refuelling system is built around NIS fuel; and Naftna Industrija Srbije is the leading supplier of marine fuels on the country’s bunkering market.
NIS is becoming an ever more active player on the regional electricity market. The company operates as an energy trader, manages oil- and gas-field cogeneration plants and, together with Gazprom Energoholding, is implementing a project to build a cutting-edge thermal energy plant in Pančevo.
Gazprom Neft’s single most important international project relates to the development of the Badra oilfield in Iraq. This asset is being developed through a consortium, operating under a service contract since 2010.
In addition to Gazprom Neft, consortium members include Korea’s KOGAS (22.5%), Malaysia’s Petronas (15%), and Turkey’s TPAO (7.5%), with the Iraqi Government being represented by the country’s Oil Exploration Company (OEC), which holds 25%. Gazprom Neft, as the Russian partner in this consortium, has the largest interest, at 30%, as well as acting as operator.
Badra is located in eastern Iraq’s Wasit Province. Reserves at this field are estimated at three billion barrels of oil. The field is expected to be under development for 20 years. The Badra project is a complex one, both in terms of its geology (the field could be imagined as a mille feuille, with alternating clay and limestone deposits, which makes drilling difficult) and in terms of its environmental problems: it was, until recently, a war zone, and almost 30,000 mines and bombs have had to be cleared and destroyed since work started on the project.
Nonetheless, the consortium has, in a relatively short time, managed to create an advanced industrial complex in the Iraqi desert, unique in the variety of products manufactured. This asset went into commercial development in 2014. Gapzromneft-Badra commissioned a 1.6-billion bcf-capacity gas plant in 2017.
Not only oil and gas are now being produced here, but also granulated sulphur and electricity. Cutting-edge technological solutions have made it possible for the company to monetise all hydrocarbons produced at Badra. Cutting-edge solutions have also made it possible to ensure optimum environmental-friendliness on the project, with associated petroleum gas (APG) utilisation running at more than 98%. Total cumulative oil production at the Badra field reached more than 100 million barrels in 2019.
Badra is not Gazprom Neft’s only project in Iraq. In 2012 the company embarked on new hydrocarbon exploration and development projects in the south of the independent Kurdistan Region of Iraq (KRI). These being the Garmian and Shakal blocks, in which the company holds a 40% and 80% interest, respectively. The company has started developing the Sarqala field in the Garmian block. This field has uniquely high formation pressure and formation temperature.
Gazprom Neft subsidiary Gazprom Neft Middle East B.V. is developing these assets in conjunction with the Kurdistan Regional Government (KRG). Canadian company WesternZagros is also involved in developing the Sarqala field. Commercial crude shipments from the Garmian block commenced in 2015.
Three production wells are delivering a total 4,000 tonnes of oil (30,500 barrels) of oil per day. Total cumulative production at this asset stood at more than three million tonnes (23 million barrels) of oil as at end 2019.
Gazprom Neft has owned the Gazpromneft Lubricants S.P.A. plant in Bari, Italy, since 2009. It was here that the company launched production of its premium lubricants line, under the G-Energy brand.
With a significant proportion of the production of G-Energy lubricants having been localised in Omsk, the company’s Italian plant is now mainly supplying the European market. One of Europe’s largest lubricants ’plants, producing 30,000 tonnes per year.
Gazprom Neft is involved in developing the Junin-6 field in Venezuela, in conjunction with PDVSA and Rosneft. This is a gigantic asset, with reserves of 10.96 million barrels of ultra-heavy oil (6.5° API gravity): Venezuelan oil has a higher density than water. Gazprom Neft was, until 2012, the leader on this project, successfully taking it in to early production.