Gazprom Neft obtains control over Novoport field

Press-release

The Gazprom Neft Board of Directors has approved the company’s participation in the charter capital of Gazprom Neft Novy Port LLC, which holds a license to the major oil and gas condensate field Novoport, which is located on the Yamal Peninsula.

Novoport field
Novoport field (August 2012)

Gazprom Neft is contributing 6.3 billion rubles to the charter capital of Gazprom Neft Novy Port, which gives it a 90 percent share in the company. JSC Gazprom (ссылка откроется в новом окне) remains the second owner of Gazprom Neft Novy Port. In the future, Gazprom Neft will obtain 100 percent ownership of Gazprom Neft Novy Port.

The categories C1 and C2 recoverable reserves of Novoport oil and gas condensate field exceed 230 million tons of oil and 270 billion cubic meters of gas.

Control over Novoport field is being transferred to Gazprom Neft as part of a strategy for the transfer of a number of JSC Gazprom oil assets to Gazprom Neft. Novoport is the second field that Gazprom Neft has obtained so far. After obtaining Gazprom Neft Orenburg CJSC at the end of 2011, Gazprom Neft became the owner of the eastern part of Orenburg field, and is creating a new production cluster, in Orenburg. The company plans to be producing 6 million tons of oil equivalent per year in the Orenburg region within five years.

Gazprom Neft has been functioning as the operator at Novoport field for several years already. In 2012, the company conducted a successful test of the first production well drilled at Novoport. The company plans to begin year-round oil production at the field in 2014.

The drilling of three horizontal wells at the second of the field’s well clusters is planned for next year at Novoport. Construction of a year-round oil export terminal, will also begin next year. The target for commissioning of the terminal is 2014.

“Obtaining control over Novoport will enable Gazprom Neft to book that field’s oil and gas reserves. Next year, we will continue pilot production at the field and preparing the field for a year-round production. However, a final investment decision and the possibility of a transition to full-scale development of Novoport will depend on the tax regime that applies to the Yamal territories. The lack of infrastructure, harsh climatic conditions, and geographic remoteness make support from the state a necessary condition for the implementation of new oil and gas projects in the Yamal region,” noted Gazprom Neft First Deputy CEO Vadim Yakovlev.

Reference

Novoport field is the northernmost oil and gas condensate field currently being developed in Yamal. It lies in an arctic climate zone on the territory of Yamal District of the Yamal-Nenets Autonomous Okrug, remote from transportation infrastructure, 30 km from the coast of the Gulf of Ob, where the ice-free period lasts three months out of the year, from July to September.

In spring 2011, Gazprom Neft confirmed that it would be possible to arrange year-round export of oil from the field by sea. To this end, a test run of the nuclear-powered icebreaker Vaygach was conducted from Sabetta Port (located in the northeast of the Yamal Peninsula) to Kamenny Cape, located 400 km to the south, where it is planned to export oil from Novoport field.

A tender for performance of design, supply of equipment and materials, construction, and commissioning operations at the Arctic Year-Round Oil Export Terminal at Novoport field was completed in 2012. Construction of the terminal will be completed in 2014.