Gazprom Neft starts drilling in Iraq

Press-release

On 24 November, drilling of the first appraisal well in the Iraqi Badra oil deposit, operated by Gazprom Neft, commenced. The depth of the appraisal well will reach 4,900m. Drilling is expected to be completed in April 2012.

Before drilling started, 3D seismic field surveys were carried out and the results were processed and evaluated. The seismic work clarified the geology and maps of the main productive strata have been produced. Based on the results of drilling the appraisal wells, a plan for the most efficient way for development of the deposit will be drawn up.

In July 2011, a three-year agreement was signed with Schlumberger to drill 11 wells. A total of three rigs will operate simultaneously on the site. Drilling of the second appraisal well at Badra will be started by the end of 2011 and in January 2012 the recommissioning and testing of the earlier Bd.1 exploratory well will commence. When investigations have been completed, the appraisal wells will become operational.

It is planned to start drilling a deep appraisal well (6,200m) to study the lower strata at the Badra deposit in June 2012. A tender is currently under way to test the wells and bring them into production.

“The results of the initial appraisal wells will allow us to better understand the geology of the location, produce a definitive operating plan and move to commercial production of at least 15,000 barrels of oil per day in August 2013. All the work on the project is being carried out in line with the schedule set out in the Badra operating agreement,” commented Vadim Yakovlev, First Deputy CEO of Gazprom Neft.

Notes for editors

The Badra oil field is located in the Wassit Province in Eastern Iraq with an estimated 3 billion barrels of oil in place. The contract to develop the Badra oil field was signed with the Iraqi Government in January 2010 following submission of a tender in December 2009. This tender was awarded to an international consortium comprising Gazprom Neft, Kogas (Korea), Petronas (Malaysia) and ТРАО (Turkey).

Gazprom Neft's share, as lead operator on this project, is 30 per cent, Kogas' share is 22.5 per cent, Petronas' share is 15 per cent and ТРАО's share is 7.5 per cent. The Iraqi Government, represented by the Iraqi Oil Exploration Company (OEC) retains 25 per cent.

The Badra development project is expected to last for 20 years with a five-year extension option. The calculated investment is expected to amount to about $2 billion. Under the agreement, investors will be reimbursed for costs incurred and paid a bonus of $ 5.5 per barrel of oil equivalent produced.

First production at the deposit is planned for 2013. By 2017 production is expected to reach 170,000 barrels per day (about 8.5 million tonnes per year) and maintain at this level for 7 years. In total 17 operational and five injection wells will be drilled.