- 2Message from the Executive Chairman of the Board of Directors
- 3Interview with the Deputy Chairman of the Management Board of TNK-BP
- 4Our Strategy for the Future
- 5Key financial and operational highlights of 2010
“The Salt of the Earth”
“The Core Value of Integration”
- 8Gas business development “Transformational Change”
- 10Social responsibility
“Doing It Right”
- 11Our financial performance
- 12Subsequent events
9.5 MB PDF
8.5 MB PDF
Gas business development
|Gas business development||Associated petroleum gas||Energy efficiency|
TNK-BP’s strategic goal is to move away from being a predominantly oil-producing business to being a major, world-class, integrated oil and gas company. In 2010, the company made significant progress in implementing its gas strategy notable increase in production over the next 5 years. This will be achieved with a by developing of existing world-class gas reserves in Russia - such as Rospan - as well as by participating in the implementation of new gas projects in Russia and neighbouring countries.
Another important objective is to ensure compliance with associated petroleum gas flaring regulations. The company’s goal in this regard is to achieve a utilisation level of 95% for all of its oil fields. TNK-BP will also continue to invest in commercial power generation, where it can monetise gas and ensure energy efficiency for oil production and refining.
By capitalising on its gas resource base, the favourable changes in the economic situation and regulations, and additional gas-related opportunities in Russia and abroad, as well as on experience gained, TNK-BP should aspire to achieving more than 20% gas contribution to its total output deriving over 20% of the company’s total EBITDA from the gas business. We plan to reach these targets by 2020. Thus, TNKBP’s gas strategy can be summarised simply as 20/20/20.
20/20/20 gas strategy
Despite the fall in gas demand caused by the economic crisis, the ambient environment has become more favourable for the development of an independent gas business. In 2010, gas production in Russia approached pre-crisis indicators. In the long-term, according to company estimates, the demand for natural gas will continue to grow in all major gas markets. This factor, along with the continuing decline of gas production in old fields, will stimulate interest in the development of new fields.
Gas production in Russia, bcm
Gas prices in Russia will definitely grow in the coming years, while the tax burden will remain balanced. TNK-BP believes that these tendencies will help to increase the profitability of gas projects in the foreseeable future.
Dynamics of gas prices in Russia, USD/mcm
TNK-BP owns 100% of Rospan International, a gas-producing company in the Yamalo-Nenets Autonomous District. Rospan has significant gas potential, with 2 bn boe of proved reserves (PRMS) and 6.034 bn boe of 3P reserves, and an ability to produce 16.5 bcma (please read more about Rospan).
In 2010, Rospan sold 2.74 bcm of gas, while in 2011, the company expects to sell 3.2 bcm. Rospan sells gas through the Novy-Urengoi gas company (NUGK), a marketing jointventure with Mezhregiongaz (a Gazprom subsidiary) that started operating in March 2008, selling gas to industrial customers in Russia at prevailing market prices. Based on the experience of Mezhregiongaz and its knowledge of the domestic market, NUGK will build up its presence in regional Russian markets and secure opportunities to increase gas production at Rospan’s fields.
The joint-venture markets Rospan’s entire gas production, and in 2010, large volumes of Rospan gas were delivered to “premium” markets (such as Yekaterinburg and Perm), which, combined with the general increase in gas prices in Russia, allowed the company to secure a better price for the gas.
In 2010, TNK-BP was granted access to a unified gas pipeline system for incremental production, which is effective until 2016, and on that basis concluded a transportation agreement with Gazprom, also effective until 2016. The company plans to sign a further transportation agreement with Gazprom, which will be effective until 2018, and to continue negotiations about further pipeline access.
In addition to Rospan, the company has significant reserves in gas caps in the Nizhnevartovsk region. The gas caps development project has the potential to deliver gas by 2018-2019 (with pilot work commencing in 2014-2015). Comprehensive technical and commercial analysis of this project was ongoing during 2010 and will continue in 2011.
The next stage of expanding our gas business will involve the production of associated and free gas at the Suzunskoye, Tagulskoye, Russkoye, and Messoyakhskoe fields in the Yamalo-Nenets Autonomous District and in the north of the Krasnoyarsk region. The fields have abundant resources, although they have not yet been fully explored.
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