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. Last Updated: 07/27/2016

Timan to Work With Gazprom

Timan Oil & Gas said in a statement Thursday that it had signed the first step of a potential agreement with energy services company Zapsibgazprom, a subsidiary of Gazprom.

Under the agreement, Zapsibgazprom could invest up to $500 million in Timan, which works in the southern Dagestan and northern Timan-Pechora, Timan said.

"The main goal of the agreement is to develop Timan's oil and gas assets and bring them on stream," said Timan CEO Alexander Kapalin, adding that Gazprom could buy into the company. But he made it clear that a takeover by Zapsibgazprom, which is 86 percent owned by Gazprom, was not planned.

"It's beneficial for both parties if Gazprom acquires a substantial stake in the company, but one thing not being discussed is a takeover," Kapalin said.

A source close to negotiations said taking a stake in Timan was currently being discussed at Zapsibgazprom and that a deal was likely to be concluded by the first quarter of 2008.

Zapsibgazprom's remaining shareholders are employees at the company, he said.

Exploration has ended in the Timan-Pechora region, and Zapsibgazprom will help drill 2,600 wells over the coming years, hoping to produce 50,000 to 70,000 barrels per day in 2014.

Timan's Caspian Sea activities in the south of Russia are at an exploratory stage, Kapalin said, with estimated reserves standing at 3 billion barrels.