* Sees oil output reaching 3.5 mln T/year at Yarudeyskoye
* Investment in field over next 3 years seen at $1.5 bln
MOSCOW Nov 8 Novatek, Russia's
second-biggest gas producer, plans to take advantage of
government incentives to boost its crude oil production and
further diversify its business, a company official said.
The government has introduced tax relief and other
incentives to encourage increases in oil production as it aims
to at least maintain Russia's output at no less than the current
10 million barrels per day, the world's largest, this decade.
Novatek is pinning its hopes for oil on the Yarudeyskoye
field in Northern Russia, in which it owns 51 percent. The rest
is owned by a Cyprus-registered firm.
"Crude oil is obviously becoming a much more significant
business for us," Novatek Chief Financial Officer Mark Gyetvay
told a conference call.
He estimated overall investment in the field over the next
three years to be $1.5 billion, "of which we are responsible for
51 percent of the capital costs".
The field is subject to zero mineral extraction tax until
According to Novatek's website, Yarudeyskoye field contains
4.5 million tonnes of petroleum liquids (33 million barrels) and
7.4 billion cubic metres of gas.
The company, whose gas output is second only to state-run
Gazprom's, plans to start production of oil there in
2015 and reach a plateau of 3.5 million tonnes a year (70,000
barrels per day) the following year.
According to Sberbank CIB analysts, the Yarudeyskoye field
and the Norgtas and SeverEnergia project, in which Novatek owns
about a quarter, will enable the company to increase oil and
condensate production to almost 10 million tonnes a year by
2017, generating net income of over $600 million in 2016 alone.
Novatek's crude output is currently no more than about
10,000 barrels per day.
The company, controlled by its head Leonid Mikhelson and
Gennady Timchenko, co-owner of Gunvor trading house, also plans
to start producing liquefied natural gas in 2016, with a view to
produce 16.5 million tonnes of the frozen gas a year in 2018.
(Reporting by Vladimir Soldatkin; editing by Jane Baird)