Gazprom Neft’s Dyukov reflects on sanctions, technology and future projects

Eugene Gerden
Saturday, November 1, 2014

Gazprom Neft, the fourth largest oil producer in Russia and the subsidiary of Gazprom, may consider the possibility of suspension of implementation of several projects on the Russian shelf, due to sanctions, imposed on Russia.

Alexander Dyukov.

The company believes that sanctions may be lifted already by the end of the current year, especially, due to the improvement of the current situation in Ukraine.

Alexander Dyukov, chairman of the management board of the company, is also President of Russian Premier League team Zenit St. Petersburg, (one of the world’s most popular soccer team in Russia) and one of Russia’s most successful young Russian top-managers. He spoke about the current situation in the company to Eugene Gerden.

How have Western sanctions affected Gazprom Neft’s offshore projects?

Dyukov: They have had a negative effect on us, as several Western companies have already refused to work with Gazprom Neft on the shelf. To date, three to four companies have suspended cooperation with us on offshore projects. However, Gazprom Neft does not see any tragedy in their decision to do this. We are planning to find new contractors, possibly in Asian countries. At the same time, Gazprom Neft continues implementation of a practice of permanent import substitution, so the sanctions will not affect the company’s operating and financial results. The sanctions may only cause inconvenience, associated with the need to harmonize deliveries of certain production and, in particular, equipment from abroad, in accordance with already signed contracts.

Are there any possibilities that sanctions may restrict Gazprom Neft’s access to loans from Western banks?

Dyukov: At present, the company’s loan portfolio is comprised of two-thirds from the borrowings of American and European banks. In this regard, due to sanctions, we will have to borrow more in the Russian market in the future.

Does the company have all the necessary technologies for operations on the shelf? What will it take in order to obtain such technology?

Dyukov: Currently, Gazprom Neft has the majority of technologies for operations on the shelf. Earlier this year, the company signed an agreement with the Krylov State Research Centre, one of the world’s major ship research and design centers, on the joint design of technologies and marine equipment for the development of offshore oil fields, which are currently operated by Gazprom Neft.

At present, the company operates on several offshore fields, among which are Prirazlomnoe field, an Arctic offshore oilfield in the Pechora Sea, south of Novaya Zemlya. Its development is the first commercial offshore oil development in the Arctic. Its reserves are estimated at 610MMbbl.At the same time, the company has already started geological studies of the Dolginskoye (Pechora Sea) and the North Wrangel oil fields (East Siberian and Chukchi Seas). All the projects are implemented in difficult climatic conditions and are associated with the need to meet strict industrial and environmental safety standards.

Are there any plans to participate in any offshore projects overseas?

Dyukov: Yes, Gazprom Neft plans to take part in the auction for the development of several offshore oil and gas fields in Croatia. However, the names of these fields are not currently disclosed. So far, the government of Croatia has put up for auction 29 oil and gas blocks in the Adriatic Sea, to conduct further exploration and development. Receipt of applications will last until 3 November 2014, and the results will be announced at the beginning of 2015.

Categories: Russia Arctic

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