Gazprom Neft to cut geological exploration works 20% in 2020

MOSCOW, Jul 10 (PRIME) -- Russian oil major Gazprom Neft will reduce its geological exploration program for 2020 by around 20% compared with the initial plans amid the current crisis in the industry, Yury Masalkin, head of the geological exploration and resource base development department, told PRIME in an interview on Friday.

“The geological exploration program for 2020 was even more ambitious than in 2019. The crisis overtook us around the beginning of March, when there was a sharp decline in oil prices. We cannot but respond to serious changes in the external market conditions, that’s why geological exploration works this year will be reduced, but not significantly. The decrease will be about 20% compared to the initial plans,” Masalkin said.

He also said the volume of exploration drilling will also decrease slightly: in 2020, the company plans to drill about 45 wells, which is five wells less than in 2019. At the same time, he noted that Gazprom Neft had already performed almost 100% seismic surveys.

Gazprom Neft plans to revise its geological exploration program for 2020, including plans to limit investments in acquisition of new license blocks, Masalkin said.

“We will review plans and formulate an updated exploration program, primarily based on the strategic demand for hydrocarbons. In particular, we plan to limit investments in acquisition of new license blocks,” he said.

In 2019, the company doubled investments in geological exploration works to around 46 billion rubles, he added.

Gazprom Neft did not drop its plans to attract foreign partners to the development of the Chonsky project in East Siberia despite the coronavirus and economic turbulence, Masalkin also said. He added the project remains a priority for the company.

“Last year, we discovered new oil deposits at one of its sections. The expected increase is more than 19 million tonnes of oil or almost 10% of the recoverable reserves of the entire Chonskaya group. Pilot horizontal drilling is underway. Their results will allow us to make investment decisions and launch the first phase of development of this group of fields approximately in 2025–2026,” Masalkin said.

“There were plans for foreign partners to enter the project already in 2020. Due to the epidemiological situation and the general economic turbulence the situation has changed, but we do not give up our intentions,” he said.

Masalkin also said Gazprom Neft postponed to September from May drilling of the first exploration well on the Gydan Peninsula due to warm winter and expects to receive first results in the first half of 2021.

The company may open a new oil and gas province on the Gydan Peninsula if oil and gas reserves are confirmed based on the results of drilling a prospecting and appraisal well, he added.

Gazprom Neft plans to start drilling the first exploration well on the Yuzhny Orenburg project in 2021–2022, while the full-scale development is planned for 2026–2027, Masalkin also said.

The company is currently in the process of studying five license blocks on the southwest of the Orenburg Region, he said.

Masalkin also said that production on the Achimov deposits is not profitable amid low oil prices.

“In a 10-year perspective, the Achimov deposits can provide from 30% to 50% of production from new Gazprom Neft fields. However, the extraction of such complex reserves is unprofitable so far,” Masalkin said.

(70.8800 rubles – U.S. $1)

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