Page 18 - FSUOGM Week 34

FSUOGM PROJECTS & COMPANIES FSUOGM

INK sets records in horizontal

drilling in Eastern Siberia

RUSSIA EASTERN Siberian oil producer Irkutsk Oil Markovskoye was identified in 1962, making
(INK) has reported setting a new record in hori- it one of the first oil discoveries to be made in
zontal drilling at one of its main fields. Eastern Siberia. But a lack of infrastructure and
The company said on August 20 it had sunk a market access in the region meant its develop-
4,796-metre well at the Markovskoye field in the ment did not get underway until the 2000s.
Irkutsk region, consisting of a horizontal section Markovskoye began flowing oil to Asian
with a record length of 1,745 metres. Its drilling markets in 2011, following the launch of the
division also completed a 4,994-metre well at Eastern Siberia – Pacific Ocean (ESPO) pipe-
the site, representing the company’s longest ever line two years earlier. ESPO carries Eastern
borehole. Siberian crude to Russia’s Far Eastern port of
In a statement, INK said it hoped to drill Kozmino, where it is loaded onto tankers for
wells with lengths exceeding 5,000 metres in the export.
future, with the help of new technologies and INK's current focus is raising Markovskoye’s
advanced equipment. gas output, as part of a broader gas develop-
INK is the largest independent oil producer ment programme. It wants to build gas-pro-
working in Eastern Siberia, with rights to doz- cessing facilities at the site, and sell by-product
ens of fields and licences across the regions of natural gas liquids (NGLs) to local consumers,
Irkutsk, Krasnoyarsk and Yakutia. It lifted more and use them as feedstock for petrochemical
than 180,000 barrels per day (bpd) of oil last year. production.™

NEWS IN BRIEF

RUSSIA RUB2 trillion ($26.9bn) to implement the programme intensifies," VTBC warns.
plan, above the RUB750bn already budgeted The bank sees some upside risks to the
Cost of retail gas by the company for extension of retail gas capex forecasts on Gazprom. Still, given
that the discussion is at a preliminary stage
infrastructure.
connections could be could propose shifting all the cost on to and the compensation mechanisms for the
Reportedly, the United Russia deputies
company are unclear, VTBC is not making
slapped on Gazprom Gazprom, while compensating the company any changes to its Gazprom valuation model
on the back of this news.
with tax breaks and/or a carte blanche to
The ruling United Russia Party will propose issue perpetual bonds. As of end of 1Q20 the net debt of
shifting the costs of connecting retail gas However, in a separate report Interfax said Gazprom jumped by 18% year to date to
consumers to gas infrastructure on to the that the overall spending on the gasification RUB3.74 trillion, with net debt to Ebitda
state-controlled gas giant Gazprom, RBC programmes in Russia is estimated to leverage at 2x. The company pledged to
business daily reported on August 24 citing be RUB603bn ($8.1bn) over 2021-25, lower the leverage in 2021, as the market is
unnamed sources in the party. Interfax reports, citing the actual Gazprom expected to stabilise after the coronavirus
Reportedly, the measure potentially presentation during an meeting organised by (COVID-19) crisis. Analysts have already
costing up to RUB2 trillion will be pushed United Russia. warned that high leverage could compromise
at a meeting with regional authorities, the Reportedly, of this, Gazprom might Gazprom's dividends.
Finance and the Energy Ministries, and other invest RUB526bn ($7.1bn), with RUB247bn Analysts surveyed by RBC believe that
relevant agencies and watchdogs. possibly allocated to the construction of additional tax breaks for Gazprom will
As followed by bne IntelliNews, most offshoot pipelines and gas distributing plants, be met with resistance from the Finance
recently the state oil major Rosneft also and RUB279bn to build inter-settlement Ministry, and see an issue of perpetual bonds
reportedly complained about Gazprom's pipelines. as a more likely solution, already employed
hegemony over access to the Gas "RUB526bn is equal to 6% of Gazprom’s for other infrastructure investment (such as
Transportation System (GTS). overall capex and 8% of its non-upstream Russian Railways).
RBC reminds that in June, President capex over 2021-25," VTB Capital (VTBC) Gazprom posted its first quarterly loss
Vladimir Putin ordered the government, estimated on Augusts 25. since 2015 in 1Q20, as the coronavirus
Gazprom and the regional authorities The bank estimates that Gazprom spent (COVID-19) pandemic caused its European
to boost the retail connections to gas RUB153bn on gasification in 2015-19, or sales to collapse, and ruble devaluation led
infrastructure from 70% to 83% on a federal 2% of its capex for these years. "Therefore, to hefty foreign exchange losses. But the
scale by 2030. the estimated gasification spending might company still maintained its dividend policy..
Gazprom gave a preliminary estimate of grow in the coming years if the gasification

P18 www. NEWSBASE .com Week 34 26•August•2020