Russia 110204 Basic Political Developments

LUKoil Makes Electricity

LUKoil has completed construction of the fourth power block at its combined heat and power plant in Romania and is operating it on a trial basis, the company said.

The plant is located at the site of the Petrotel-LUKoil oil refinery and supplies heat and electricity to those facilities. The fourth power block will also provide electricity to the Romanian market.

The boiler will use petroleum coke, an inexpensive end product of the refining process, as fuel. This is LUKoil’s first project to use petroleum coke as a fuel source for electricity production.

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Gazprom Neft Names Front End Engineering Design Contractor for Iraqi Badra Field

The tender award decision has also been taken for the road and well site construction, as well as for the construction of a permanent camp. The Iraqi ALMCO was selected as the contractor in both cases. In January 2011, the mobilisation of manpower and equipment was completed, and geological engineering surveys and future roads laying-out were launched.

In accordance with the latest instructions of the Ministry of Oil of the Republic of Iraq, the ITT submissions for well drilling and integrated project management in terms of well construction were delivered to the state Iraqi North Oil Company (NOC) and the Ministry of Oil for approval and declaration of winners. The commencement of works is scheduled for April – May 2011.

The results of the first tenders for the selection of contractors for the commencement of the Badra oil field development were summarised by Gazprom Neft in autumn 2010. Within the framework of the contracts awarded, Arabian Gulf Mine Action Company will perform the mine clearance for 3D seismic and road and well site construction till May 2011. As of the end of January, about 50 per cent of scheduled works have been completed with the quality control provided by the Iraqi TAAZ. Oil Exploration Company (OEC) conducts 3D seismic field works. In 2011 a contractor is to be selected to complete the processing and interpretation of the data received during the seismic surveys by the end of the year.

“The FEED development will allow progression to the next stage of the development of the Badra field that is, to select infrastructure construction contractors so that the production can get started in 2013 as stipulated for by the contract. Iraq is one of the significant regions of presence for Gazprom Neft, and the operations at the Badra field will enable the Company to escalate a major international project management experience”, - Deputy Chairman of Gazprom Neft Executive Board Boris Zilbermints stated.

Copyright 2010, Gazprom. All rights reserved.

Russia, Serbia JV to search for oil in Bosnia

* Up to $47 mln investment for first exploration phase

* Another $315 mln in investment could follow

By Gordana Katana

BANJA LUKA, Bosnia, Feb 3 (Reuters) - Russian Naftegazinkor, a unit of state-owned Zarubezhneft, and Serbian oil firm NIS have set up a joint venture to start exploring oilfields in northern Bosnia in 2011, the two companies said on Thursday.

NIS, majority owned by Russian group Gazprom Neft (SIBN.MM), holds a 66 percent stake in the joint venture called Jadran Naftagas in which the two companies will invest $13 million to $47 million in the first exploration phase.

"Preliminary estimates indicate there could be around 12 million tonnes of geological reserves of oil," Predrag Radovanovic, the joint venture's general manager told reporters.

He added that the company will tap international lenders to help finance the project which would start in Bosnia's Serb Republic but might also expand to the country's other autonomous region, the Muslim-Croat federation.

Naftegazingor President Yuri Leonidovich Smirnov said Jadran Naftagas will apply for drilling concessions and could invest between $63 million and $315 million if the initial exploration proves promising.

Potential reserves could initially produce 100,000 tonnes of crude oil annually starting in 2014 before growing to up to 780,000 tonnes of annual output by 2020, said Radovanovic.

Naftegazinkor was given the rights for oil exploration in the Serb Republic when it acquired Bosnia's sole oil refinery, Brod, in 2007.

Research conducted by U.S. and British consultants before the break-up of Yugoslavia in the 1990s showed oil in the north and south of Bosnia but the 1992-95 war stopped the project.

Bosnian geologists say reserves are uncertain. Some see oil deposits in the north from 20 million tonnes in the federation to 50 million tonnes in the Serb Republic, but many deposits are spread between the two regions.

More oil, possibly 500 million tonnes, is believed to exist in the southern deposits at a difficult-to-assess depth of 5,000-6,000 metres.

The Muslim-Croat federation authorised the engineering group Energoinvest to lead exploration in the region with strategic partners but the process stalled due to an unfavourable concession law. (Writing by Maja Zuvela; Editing by Michael Kahn and )

02/03/2011 03:54 PM