TNK-BP May Reduce Oil Production by up to 1% in 2009 Due to the Economic Situation
TNK-BP admits that oil production may be reduced in 2009 by up to 1% due to the current economic situation, German Khan, Executive Director of TNK-BP, said at the meeting with Vladimir Yakushev, Governor of the Tyumen Region, last Tuesday in Tyumen.
"We are talking only about the natural reduction of oil production associated with the economic crisis, which, according to the market situation, may vary within 1%," he explained.
"If the situation does not improve or even aggravates, we will have to take substantial aggressive measures to lower the level capital investments and cut our operating expenditures, which will inevitably affect the volume of production."
Mr. Khan noted that the company hopes to increase its oil production in the southern part of the Tyumen Region. "We are going build up our oil production in the south of the Tyumen Region because of the ongoing implementation of the Uvat project and the necessity of returning the investments made. In the Khanty-Mansi Autonomous Area, we will continue our operations mostly in the mature fields, the infrastructure of which has been created in the previous decade. No significant changes are expected (in oil production in the Khanty-Mansi Autonomous Area ANI), because the business here is fairly efficient."
According to Mr. Khan, reduction of capital investments will mainly affect new fields and geological exploration works. Apart from that, in 2009 the company will considerably curtail its programs related to utilization of associated petroleum gas. "The volumes of processing of associated petroleum gas will be diminished due to the almost complete collapse of the petrochemical market," explained Mr. Khan.
As reported earlier, the business plan of the company for 2009 includes capital investments at the level of $3.3 billion. With this volume of capital investments, given that the price of Brent oil is $60 per barrel, the exchange rate is 30 rubles per dollar, and the tariffs of power supply and oil transportation increase by 10%, the company will be able to maintain its oil production at the level of 600 million barrels of oil equivalent, which corresponds to the level of oil production in 2008.
In the southern part of the Tyumen Region, TNK-BP is implementing the Uvat project, which embraces 15 license areas. In Q1 2009, the company is going to start commercial development of the Ust-Tegusskoe and Urnenskoe fields of the Uvat group. Approximately 2.7 million tons of oil presumably be produced in 2009 in the framework of the Uvat project.
The recoverable reserves of the license areas in the Uvat region amount to 83 million tons of category C1, 175 million tons of category C2, and 370 million tons of category C3.
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