BP seeks to drill new future in Russian venture

Urnenskoye: BP's Russian venture may lose its licence to operate the vast Kovykta gas field but, away from the headlines in a remote corner of Siberia, it is making a long-term bet on the future.

A three-hour helicopter flight over the Siberian taiga, the Uvat oilfield complex is the front line of the effort by TNK-BP, Russia's third biggest oil producer, to replace falling output at mature fields like its super-giant Samotlor.

Urnenskoye, one of 17 fields in the Uvat complex, is 400 kilometres northeast of Tyumen, the capital of the West Siberian oil heartland, and is inaccessible overland in summer when makeshift roads turn to mud. In winter, temperatures drop to -40 Celsius.

"TNK-BP, like any other oil company, has to arm itself with reserves. Production at Samotlor is falling, and it won't get you far," Alexander Terentyev, head of drilling operations at TNK-Uvat said.

The Uvat fields may contain up to 1.8 billion barrels of recoverable oil and produce 200,000 barrels per day by 2017. That would be a solid addition to TNK-BP's total reserves of 7.8 billion barrels.

British oil and gas group BP bought a 50 per cent stake in the company in 2003 in the last major foreign investment in the increasingly Kremlin-dominated Russian oil industry.

TNK-BP expects output to flatline this year at 1.5 million bpd. But new fields coming onstream should enable growth to resume in 2008 and they should account for 10 per cent of its overall production by 2009.

Hope

Uvat also holds out hope for TNK-BP as its chances of getting the most out of the Kovykta gas project dwindle.

Russia has repeatedly threatened to strip Rusia Petroleum, 63 per cent owned by TNK-BP, of its licence to operate Kovykta.

Sources say that TNK-BP is likely to cede control of Kovykta to Russian gas monopoly Gazprom.