TNK-BP to Begin Caspian Shelf Exploration in 2007

The Russian-British company TNK-BP will start prospecting and exploration of recently acquired areas in the immediate vicinity of the Caspian Sea shelf in 2007.

Robert Dudley, President and CEO of TNK-BP, said to the oil news agency Interfax-ANI that last year the company received 23 licenses for development and exploration of fields mainly in the regions of its current industrial activities.

"There are several exclusions, though." explained Mr. Dudley. "For example, we got a license for exploration and development of fields in the Astrakhan Region." According to Mr. Dudley, the Astrakhan field, where the license areas acquired by TNK-BP are situated, "are on the line that crosses the Kazakh and Russian zones of the Caspian Sea and goes on into the adjacent lands." "This is a very interesting license. For us, this is an experiment expanding the horizons of the company," he added.

Representatives of TNK-BP explained that the company acquired three areas of the Astrakhan gas condensate field the Svetlosharinsky area, Vatazhny Severny area, and Karalatsky area, whose boundaries are immediately adjacent to the Caspian Sea coastline.

TNK-NP is going to carry out 2D seismic surveys and drill exploration wells in these areas in the nearest 23 years.

Mr. Dudley pointed out that by and large, according to the five-year plan of the company adopted in 2006, near-term production will be maintained at a constant level and then increased. However, added he, the purchase of 50% of Varyeganneft shares in the beginning of this year was not scheduled, for which reason the industrial performance indicators of these activities will also be viewed as unscheduled.

According to Mr. Dudley, TNK-BP will maintain the level of reserve reproduction at 100% in 2007. "We do not have any official information yet from DeGolyer& MacNaughton, the independent auditor of our reserves, but I am sure that the result will be at least 100%. In 2007 we are going to maintain this level."

"If we manage to replenish 100% of our reserves or more, this will be an unprecedented result in the oil and gas industry of the world," said Mr. Dudley and added that the process of including the new reserves to the balance may take several years even when oil has already been explored.

The head of TNK-BP expressed his opinion that this year the company will "reach an agreement with Gazprom on joint development of the Kovykta field (a field containing 1.9 trillion cubic meters of recoverable gas reserves whose development license is held by TNK-BP ANI) and the fields of Rospan (a subsidiary of TNK-BP whose recoverable gas reserves are estimated at approximately 950 billion cubic meters ANI).

"Large-scale projects, such as development of the Kovykta field, involve several countries and require considerable time. The best indicator of our confidence in our own positions related to this field is the fact that we continue investing into this project," he said.

"The most important problem of processing this year is safe renovation and upgrade of our refineries within the time schedule and limits of our budget. We have properly calculated and drawn up the schedule of upgrades and overhauls in order to minimize the impact of upgrade and modernization works on our standing on the market," stressed Mr. Dudley.

The recoverable resources of categories D1+D2 in the Svetlosharinsky area are estimated at 40 million tons of oil equivalent. According to the risk estimates of TNK-BP, the recoverable oil reserves of this area amount to 25 million tons. The territory of the Svetlosharinsky area, spread over 600 square kilometers, is traversed by the gas pipeline connecting the Astrakhan Gas Processing Plant to Kamysh-Burun and the Tengiz-Novorossiisk oil pipeline running in 30 km from the gas pipeline.

The forecast resources of the Vatzhny Severny area are estimated at 30 million tons of oil equivalent. According to the risk estimates of TNK-BP, the recoverable oil reserves of this area amount to 54 million tons. The territory of the Vatzhny Severny area covers 1,805 square kilometers, and the distance from it to the nearest trunk oil and gas pipelines is 60 km.

The forecast recoverable resources of the Karalatsky area intended for the gas condensate system are estimated at 7 billion cubic meters of gas and 1 million tons of condensate. According to the risk estimates of TNK-BP, the recoverable oil reserves of this area amount to 10 million tons. The territory of the Karalatsky area is 1,510 square kilometers, and the distance from it to the nearest trunk oil and gas pipelines is 70 km.

"Analysis of regional geological and geophysical data points to the presence of new large deposits of hydrocarbons, including light oil, in this region. The hydrocarbon-bearing potential of this region is very high mainly because of its location in the zone of large reef structures, including the Astrakhan field, Kashagan field, and Tengiz field," explained representatives of TNK-BP.

Currently, Gazprom, LUKOIL, Rosneft, Russneft, and Tatneft are conducting their business activities in the Astrakhan Region.

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