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Sibneft To Increase Capital Expenditure

Moscow, 13 March 2002; Sibneft will raise investment in exploration, production and refining this year by more than a third to $686 million from $492 million under the terms of its 2002 business plan. The increased spending will help the company meet its goal of raising output by 29.2% to a new target of 530,000 barrels per day (26.7 million tonnes) from 408,000 barrels per day (20.67 million tonnes) last year. Sibneft will become Russia’s fifth largest oil producer if it meets its output targets this year.

Sibneft intends to spend $637 million on exploration and production, up from $448 million in 2001. This total includes $160 million to be spent at the company’s Sugmut field, which harbors proven reserves of 890 million barrels (122 million tonnes). Sibneft aims to increase output from the field by 89% to a target of 155,000 barrels per day (7.8 million tonnes) from 81,000 barrels per day (4.1 million tonnes) in 2001.

Sibneft will also spend $137 million at the Palyanovskoye and Priobskoye fields licensed to the Sibneft-Yugra subsidiary. The fields harbor estimated reserves of some 1.8 billion barrels (255 million tonnes), and production in 2002 is expected to average 14,000 barrels per day (715,000 tonnes).

“New technologies, prudent reservoir management, and rigid investment criteria will play a central role in our growth plans,” said Eugene Shvidler, president and CEO of Sibneft. “The application of these technologies will give us a greater return at our existing fields and support our expansion plans in West Siberia and beyond.”

Sibneft also intends to raise investment at its Omsk refinery to $49 million, an increase of 11% from the 2001 total of $44 million. The refinery plans to raise the share of higher margin products in its output slate, while leaving throughput largely unchanged at 262,000 barrels per day (13.284 million tonnes). Sibneft will increase output of A-92 gasoline by 26% to 1.25 million tonnes from 998,000 tonnes last year, while at the same time cutting output of A-80 gasoline from 1.9 million tonnes to 1.7 million tonnes and ending production of A-76 gasoline entirely.

The Omsk refinery will produce an estimated 28,000 tonnes of A-98 gasoline. Sibneft earlier this year became the first Russian oil company to produce high-octane gasoline in commercial quantities following the completion of a new alkylation unit last year. Sibneft in February began processing crude at the Moscow refinery, in which it recently acquired a 36% stake.