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. Last Updated: 07/27/2016

Russia to Ease Quota on PSA Projects

Russia plans to ease a quota on the number of oil projects that are permitted to operate under production-sharing agreements, Deputy Fuel and Energy Minister Valery Garipov told an international PSA conference Wednesday.

Under PSA legislation passed last year by the State Duma, the lower house of parliament, only 30 percent of the country's 12 billion metric tons of proven deposits can be developed under the PSA terms. But most of that quota would be eaten up by three proposed PSA projects - the Samotlor and Krasnoleninskoye oil fields in Western Siberia and Tatarstan's Romashkinskoye oil field - with more than 3 billion tons of crude reserves, officials said.

The government intends on making that 30 percent quota apply only to new, undeveloped oil fields, not producing ones, Yury Ten, deputy head of the Duma Industry Committee, said.

"Only new projects for exploration should be included in the quota," Ten told conference participants.

The new projects that are under consideration would only use up about 40 percent of the PSA quota, Garipov said.

Tuesday, the Fuel and Energy Ministry approved a PSA for Tyumen Oil Co. to develop the Samotlor oil field and sent the deal to a commission headed by First Deputy Prime Minister Nikolai Aksyonenko for authorization.

Industry experts said the PSA should be signed soon and the project is expected to launch operations under production-sharing terms Jan. 1.

Tyumen has secured 78 percent of the planned crude production in compensation for its investments in the project. The town of Nizhnevartovsk, in the Khanty Mansiisk region, where Tyumen is based, and the Russian Federation have yet to agree on how to split the remaining 22 percent, Garipov said. The state hopes that as Tyumen's investment in the project slips, it will be able to obtain a 31 percent stake in the project in two years.

At the Romashkinskoye oil field in Tatarstan, which is operated by Tatneft, Russia is expected to reach an agreement with Tatar authorities on how to split their stake in the project within the next two weeks, Garipov said. Then the final PSA can be signed.

Tatneft is expected to have rights to about 78 percent of the oil production from the deposit, Tatneft deputy general director Rais Khisamov said.

Khisamov also said Tatneft needs to increase its crude export quota to the maximum 45 percent limit at the Romashkinskoye oil field in order to ensure a return on its investments.

However, Garipov said that with global oil prices well over $20 a barrel, Tatneft is not likely to get an export allowance above the average 33 percent that other oil companies enjoy.

Meanwhile, two PSA projects came up against a brick wall last Friday when the Duma called off a second hearing over the plans. Lawmakers asked for more information about a Yukos project in Priobskoye and a joint LUKoil-Conoco development in the Far North.

The Priobskoye development project, like the offshore PSA blueprints for Sakhalin-3, Sakhalin-4, Sakhalin-5 and the Shtokmanovskoye gas condensate fields, has to be reviewed twice by the Duma, since these huge reserves are strategically important to Russian interests, Ten said.

Also, Garipov said at the conference that Rosneft last week finally paid off debts of about $20 million in the Sakhalin-1 offshore project. Rosneft had been struggling to pay off the debt for more than a year.


Planned PSA projects


Field/Block Licence Holder Region Reserves

(Owner) (mln tons)*

Bakhilovskoye Varyoganneftegas (Sidanco) Khanty-Mansiisk 49.37

Vanyoganneft Licence Area Vanyoganneft (Occidental/Chernogorneft) Khanty-Mansiisk 225.52

White Nights Licence Area White Nights (INA/Phibro Energy/Anglo-Suisse) Khanty-Mansiisk 61.56

Vyintoyskoye Ritek Khanty-Mansiisk 63.00

North Pokachayevskoye LUKoil-Western Siberia Khanty-Mansiisk 24.06

West Kutukhtinskoye LUKoil-Western Siberia Khanty-Mansiisk 16.42

West Malo-Balykskoye Yukos Khanty-Mansiisk 15.15

North Komsomolskoye Purneftegas (Rosneft) Yamal-Nenets 145.86

Tarasovskoye Purneftegas (Rosneft) Yamal-Nenets 82.69

Sugmutskoye Noyabrskneftegas (Sibneft) Yamal-Nenets 89.64

Imilorskoye Noyabrskneftegas (Sibneft) Khanty-Mansiisk 63.90

Lyantorskoye Surgutneftegas Khanty-Mansiisk 99.90

South Vyintoyskoye LUKoil-Western Siberia Khanty-Mansiisk 12.79

Sorochinsko-Nikolskoye Orenburgneft (Onaco) Orenburg 21.39

Rostashinskoye Orenburgneft (Onaco) Orenburg 27.51

Batyrbayskoye LUKoil-Perm Perm 25.63

Kuyumbinsky Block Slavneft Evenkiisky 1.26

Tuymazinskoye Bashneft Bashkortostan 21.77

Arlanskoye Bashneft Bashkortostan 81.73

Bavlinskoye Tatneft Tatarstan 35.60

Novo-Yelkhovskoye Tatneft Tatarstan 90.73

Sakhalin-3 Mobil/Texaco/Exxon/Rosneft Sakhalin Shelf na

Sakhalin-6 To be tendered Sakhalin Shelf na

Shtockmanskoye Rosshelf (Gazprom) Pechora Shelf 2.54 tcm**

Central Khoreiver Block To be tendered Nenets 54.95

*Recoverable Liquid Reserves (ABC1)

**Recoverable Gas Reserves (trillion cubic meters)

Source: Fuel And Energy Ministry