Page 13 - FSUOGM Week 11

FSUOGM PROJECTS & COMPANIES FSUOGM
Gazprom Neft halves cost estimates for Bazhenov shale project
RUSSIA
Production costs are now projected at only RUB16,000 per tonne versus RUB30,000 previously.
GAZPROM Neft has managed to almost halve the projected cost of producing oil from Russia’s giant Bazhenov shale formation, it said in a state- ment on March 16.
The state oil company estimates that it can extract oil from the play at a cost of only RUB16,000 ($216) per tonne, versus a previ- ous estimate of RUB30,000 per tonne. This is equivalent to $29.3 per barrel. Gazprom Neft said it had achieved this feat by improving its hydraulic fracturing technology among other advancements.
Bazhenov underlies most of Western Siberia’s conventional oil reservoirs and is estimated by Gazprom Neft to hold up to 60bn tonnes (440bn barrels) of crude. The company aims to ramp up production from the formation to 10mn tonnes (200,000 barrels) per day by 2025, to off- set decline at some of its conventional fields in Siberia.
Gazprom Neft has said in the past that lift- ing costs need to fall to RUB8,500 per tonne
for the project to be commercially viable. It had intended to tap Bazhenov jointly with its close partner Royal Dutch Shell, but the Anglo-Dutch oil major withdrew from the project in 2014 after international sanctions were imposed on Russia for its role in the Ukrainian crisis.
These sanctions bar Western companies from taking part in unconventional oil and gas pro- jects in Russia, meaning that Gazprom Neft has been forced to develop the necessary equipment, technology and expertise to exploit Bazhenov itself. It set up the Bazhenov technology centre in 2018 to assist in this goal.
Gazprom Neft has estimated before that Bazhenov could flow up to 8mn bpd of oil, equiv- alent to around two-thirds of Russia’s current national production.
Russia’s other leading oil producers, Rosneft and Lukoil, also had plans to develop Bazhenov, teaming up with ExxonMobil and France’s Total respectively. These partnerships also ended when sanctions were introduced. ™
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