Yukos and Schlumberger announced the results of the first year of a technical alliance under which Yukos is outsourcing a significant part of its oil field operations in western Siberia's Prirazlomnoye and Priobskoye oil fields.
Yukos said it "maintained production at 1998 levels despite minimal drilling activity...thanks to production optimization of existing wells through implementation of a multifaceted production enhancement program that contributed about 50,000 b/d by the end of the year."
Prirazlomnoye has proved reserves of 2 billion bbl, making it the 14th largest oil field in Russia and the 3rd largest among fields being developed by Yukos. As of Jan. 1, 2000, cumulative production was 164.5 million bbl.
Priobskoye field, which has been under limited development since 1994, has so far yielded 36.4 million bbl of oil.
Yukos also holds the license to Priobskoye's Northern Territory complex, which is postulated to hold 5 billion bbl. In 1999, total Priobskoye output reached 11.4 million bbl, which amounts to 3.4% of Yukos's total 1999 output of 327 million bbl.
Speaking to reporters in Moscow on Feb. 1, Yukos Chairman Mikhail Khordorkovsky said, "Yukos's plans call for possible significant involvement of western business. PSAs [production-sharing agreements] are one of the keys to intensifying development of giant fields like Priobskoye. The government's action of putting Priobsk on the list approved for PSA benefits gives us a great boost."
Typically, Russian PSAs are reserved for marginal fields that require a great deal of technical application for economic development.
Technology injection
Yuri Beilin, president of Yukos Exploration & Production, said, "With a reserve-to-production ratio of 35-40, we must accelerate recovery with technology, such as that provided by Schlumberger."
Beilin said, "The net effort of the alliance added 1 million bbl of oil in 1999." And that is anticipated to grow in the coming year.
"Our efforts for this year call for investing not less than $150 million in Priobsk. This year we expect production to rise to around 22.4 million bbl."
Discovered in 1982, Priobskoye occupies an area of 5,446 sq km. It is located along the Ob River 65 km east of Khanty-Mansiisk.
Eight hundred wells were treated during 1999, while a total of 1,500 candidate wells have been identified. Schlumberger has been applying a frac technique that reduces skin damage.
"Zonal isolation in the Priobskoye field will make or break the economics of that field development," said Andrew Gould, executive vice-president of oil field services for Schlumberger. "This can only be guaranteed with optimized drilling techniques, a fine-tuned mud system, good logs, and the latest cementing practices."
In 1999, Yukos and Schlumberger engineers increased production in Prirazlomnoye field by 20% by implementing improved electrical submers- ible pump techniques. This program involved 104 wells.
PSA update
A bill to put the Northern Territory on the list of deposits eligible for development under PSAs was passed by the state Duma in October 1999.
Projects developed under PSAs are subject to reduced taxation (a minimum reduction of 50%). Investors in oil field where PSAs apply are released from paying certain taxes, duties, and excise duties (OGJ, Oct. 18, 1999, p. 36). These payments are replaced by the sharing of production.
The companies are free to export production from Russia on terms and conditions determined by the PSA, without volume restrictions.
The law also provides foreign investors protection from many of the risks associated with the instability and volatility in the Russian market, according to Yukos.
Yukos Chairman Mikhail Khordorkovsky
"Yukos's plans call for possible significant involvement of western business. Production-sharing agreements are one of the keys to intensifying development of giant fields like Priobskoye. The government's action of putting Priobsk on the list approved for PSA benefits gives us a great boost."
