New northern oilfields to keep Russia's Bashneft growing
MOSCOW (Reuters) - Bashneft (BANE.MM), Russia's mid-sized oil producer, sees oil output at its new Trebs and Titov oilfields at up to 900,000 tonnes (18,000 bpd) next year, Chief Executive Alexander Korsik told the Reuters Russia Investment Summit on Monday.
Discovered in the final years of the Soviet Union, Trebs and Titov, among the state's largest untapped assets at the time they were issued to Bashneft, will help keep Russian oil output afloat in the coming years as its older fields decline.
Tapping the Soviet legacy of oil exploration is one way for Russia to keep production at or near record levels of more than 10 million barrels per day, but new fields, especially those like Trebs and Titov which are located in remote regions, require large investments and new technologies.
The bulk of the Russian oil industry remains subject to twin revenue taxes - mineral extraction tax and export tax. But the government has made some exemptions available, for new or challenging fields, including Trebs and Titov, for so-called "tight" oil projects including Russia's vast untapped oil shales, and for heavy crudes.
Bashneft, one of the few Russian oil companies to remain outside state control after the takeover of No. 3 player TNK-BP by state giant Rosneft (ROSN.MM), is seeking to take advantage of those exemptions.
Part of oil-to-telecoms company Sistema (AFKS.MM), Bashneft started producing in test mode at the two fields in the Timan-Pechora province of northern Russia, the biggest new project to be launched in several years.
The ramp-up of production at the two fields, with combined reserves of 140 million tonnes, is planned in three phases, with peak production of 4.8 million tonnes a year expected by 2018.
"The first phase targets 1.5 million tonnes, the second, up to 3 million tonnes, and the third, 4.8 million tonnes," Korsik said. He added that next year's output at the fields is seen at up to 900,000 tonnes.
Bashneft's oil production growth rates had been the highest among Russian companies during first two years after Sistema bought the assets - mainly refineries and old, heavily depleted oil fields - from the local government of Bashkortostan in 2010, with a spectacular rise of almost 7 percent in 2011 thanks to enhanced methods of extraction.
Korsik, a seasoned oilman who was a top executive at Roman Abramovich's Sibneft oil company before its sale to Gazprom (GAZP.MM), said output at the old Bashkortostan fields to remain largely flat, at around 15.7 million tonnes, in the next couple of years. They pumped 15.4 million tonnes of oil last year.
The company, which ranks among top 10 Russia's oil producers, also aims to start exploration seismic work at block 12 in Iraq this winter. Korsik said the company does not plan actively expand its operations abroad.
At home, where oil and gas provide the government with over half of tax receipts, revenues are under rising pressure to help fund social spending.
Faced with high spending pledges made by President Vladimir Putin after his return to the Kremlin in May 2012, the finance ministry has proposed a $1.1 billion increase in the oil tax burden for next year.
In what it has termed a tax "man oeuvre" which would encourage exports by cutting the export duty but raise the levy at the wellhead, it would then reap an additional 68 billion roubles in 2015 and 72 billion roubles in 2016.
Korsik, in the first public comments by a head of a Russian oil company on the changes, said the measures may not be beneficial for the company, and predicted domestic oil prices would rise as a result, dealing a blow to refining margins.
Bashneft must buy in oil in addition to its own production to feed its refineries, which have a total annual capacity of 20 million tonnes. Each spike in crude prices eats into its margins.
"We understand the consequences. When the export duty is lowered, the oil price in Russia rises. Because we buy oil, the refining margin is squeezed," Korsik said.
He predicted a possible rise in motor fuel prices, a sensitive issue for a country where the car fleet is expanding rapidly.
"If the state is pursuing a policy of tax increases for the oil companies, it's natural for them to try to get a profit somewhere. It looks like it will be reflected in the price (of motor fuel)."
He also echoed calls for a switch to profit-based tax to boost investments into advanced technologies at existing fields, which may spur output the same as couple of years ago in the United States.
"There is lots, lots of oil underground, the infrastructure is in place, people are in place - the issue is taxation ... the shale revolution in the U.S. was largely determined by a tax regime which allows one to think, be creative and know that taxes would be taken from that which was earned."
(For other news from Reuters Russian and Eastern Europe Investment Summit, click here)
(Additional reporting by Olesya Astakhova, Alla Afanasyeva, Polina Devitt and Timothy Heritage; editing by Melissa Akin, Keiron Henderson and David Evans)
- Washington, DC city council raises minimum wage to $11.50/hr in 2016
- India trims perks for U.S. staff in row over New York envoy arrest
- China confirms near miss with U.S. ship in South China Sea
- Mega Millions lottery winning tickets sold in California, Georgia |
- UPDATE 5-Mega Millions lottery winning tickets sold in California, Georgia -Officials