Gazprom Neft Will Grow, But Only on Acquisition

ST PETERSBURG -- Oil firm Gazprom Neft said Saturday that it did not expect organic growth of oil production this year, although output would rise by 14 percent because of the acquisition of a new asset.

Gazprom Neft president Alexander Dyukov told reporters that the company expected its oil production to reach 49 million tons (980,000 barrels per day) this year, compared with 43 million tons produced last year.

The increase will be provided by its purchase of 50 percent of the 12-million-ton-per-year oil producer Tomskneft last year from oil major Rosneft.

Rosneft bought the unit at a state auction to sell assets of bankrupt oil firm Yukos last year.

"We have managed to stop production decline at Tomskneft and are going to stabilize output at 11.5 million to 12 million tons per year," Dyukov said, adding that the slight production increase was possible at the unit this year.

Gazprom Neft, the country's fifth-largest oil producer, has been fighting declining production since its former owner, billionaire Roman Abramovich, sold the company, then called Sibneft, to the gas giant in 2005.

Last year's production was flat compared with the 2006 output.

The company approved last year a development strategy that envisions production growth to at least 80 million tons by 2020.

Gazprom Neft said earlier this month that it would raise capital expenditure by 36 percent to 89 billion rubles ($3.76 billion) for this year to increase stagnating output.