Gazprom Neft, Zarubezhneft to develop hard-to-recover oil reserves in West Siberia

Gazprom Neft and Zarubezhneft have agreed to set up a joint venture for exploration and production of hard-to-recover oil reserves in the Khanty-Mansi Autonomous Okrug—Yugra in West Siberia, Russia.

In this connection, the two Russian state-owned energy companies have signed a binding agreement, which also calls for developing effective technologies to meet their objective.

The asset portfolio of the new joint venture will include the Salysmky-3 and Salymsky-5 license blocks. The two blocks are both located in the Nefteyugansky district in Khanty-Mansi Autonomous Okrug, where the two companies expect to start commercial production of non-traditional oil reserves as soon as 2025.

The deal is anticipated to be closed in July—August 2020 after all the required corporate approvals are granted and all applicable pre-conditions are satisfied.

Gazprom Neft will hold a 51% stake in the joint venture, while Zarubezhneft will hold the remaining 49% stake.

Gazprom Neft, Zarubezhneft to form a joint venture to develop hard-to-recover oil reserves in Khanty-Mansi Autonomous Okrug. Photo courtesy of Gazprom Neft PJSC.

Vadim Yakovlev – Deputy Chairman of the Management Board and Deputy CEO for Exploration and Production of Gazprom Neft said: “It’s quite clear that the future development of the oil and gas industry largely depends on developing ‘hard-to-recover’ oil reserves, which are going to have an ever-increasing role in production. Non-traditional hydrocarbon reserves are colossal — but not readily accessible in terms of full-scale development.

“The last few years have seen an exponential increase in our knowledge and skills in investigating and developing these reserves. The technological and engineering solutions developed by Gazprom Neft — both independently, and as part of various consortia — means we are now in a position to prepare for developing deposits that, just a few years ago, would have been deemed unprofitable.

“Combining our technological competencies with those of Zarubezhneft will allow us to make the difficult transition from geological prospecting to starting commercial development at our Salymsky assets quickly.”

The Salymsky-3 and Salymsky-5 license blocks, together, are spread over 710 square kilometers in total.

According to Gazprom Neft, more than 300 square kilometers of 3D seismic works have been done at the Salymsky-3 block so far, while the first exploration and appraisal well has been drilled, and core samples have been taken.

Furthermore, the partners expect to shortly begin a fifteen-stage hydraulic fracking operation.

Gazprom Neft said that the initial core-sample analysis shows that hydrocarbons to be present at six potentially promising intervals, prove the viability of commercial production at the block. The Russian oil producer said that geological prospecting works are expected to begin at the nearby Salymsky-5 block by the end of this year.

Gazprom Neft claimed that preliminary prognoses suggest initial reserves in place at the two blocks are made up of over 500 million tonnes of oil.

Sergei Kudryashov – General Director of Zarubezhneft said: “Zarubezhneft PJSC’s core objective is to expand our activities abroad. Experience has shown that competing successfully in international markets demands the best technologies, skills and specialists. To that end, Zarubezhneft PJSC is collaborating with the best Russian companies, including Gazprom Neft, establishing the ‘Carbonate Consortium’ in 2017 for that purpose.

“The first stage in this consortium’s activities was to create a forum for experience-sharing and discussions between leading experts at both companies. The second stage was developing R&D. We’re now moving towards the next stage — implementing concrete projects.”