OREANDA-NEWS. December 22, 2009. The Russian-English TNK-BP plans to increase its oil production by almost 3% next year up to 71.8—72 million tons. For this purpose, up to US3.5 bln will be invested in Upstream, and exploration investments are to double. Analysts believe, TNK-BP and Rosneft may become industry leaders next year in terms of increasing production growth rate, reported the press-centre of TNK-BP.  

TNK-BP investments in Upstream in 2010 will cap current years’ investment by 22—30% growing to as much as US 3.3— US 3.5 bln, Sergey Brezitsky, EVP Upstream said at the press-conference yesterday.  In particular, US 450 mln will be spent to finance Yamal projects, while spending for Verkhnechonsk and Uvat group of fields will reach US 500 mln.

Exploration investments will double to amount to US 300 mln.  US 100 mln out of that amount, will be spent on Yamal fields; Orenburg Region, and Uvat Project on the South of Tyumen Region, will each get US 70 mln. US 20 mln will be spent on Timano-Pechora, and the rest — on West-Siberian fields.

The company expects this to increment oil production by 70 million tons in the current year and up to 71.8—72 million tons in the next year. Victor Vekselberg, a joint holder in the company, said earlier that TNK-BP investments would reach US 4 billion in 2010, and hydrocarbon production would be growing by 2—2.5%.

Besides, 2.3 million tons of oil is expected to produce next year from Verkhnechonskoye field, a major project run by TNK-BP (Rosneft holds ca. 26% in the project). However, its development showed that the project was more complicated than we had expected, Sergey Brezitsky explained. The company suggests US 1.2 bln Capex for the project over the next 3 years. According to Brezitsky, the issue will be considered on Monday by the company’s Investment Committee. According to TNK-BP Website, project investments have already totaled in more than US 1 bln, and may reach US 4—5 bln depending on the number of wells.

Vitaly Kryukov, Analyst of Financial Group Kapital believes that TNK-BP and Rosneft will become industry leaders next year among vertically-integrated oil companies in terms of growing oil production rate, for they have provided themselves with operations base by launching greenfield operations.  He believes, the company will be able to finance the Capex from operating cash flow, and with oil price remaining at US 70 per barrel, the shareholders may also expect to enjoy fat dividends.

Victor Mitroshin, Analyst of Otkrytie Financial Company believes that Verkhnechonskoe and Uvat Project can offset the company’s production fall in West Siberia (3% this year and 3.4% in 2010).  “TNK-BP has a potential for capitalization growth; but to become Russia’s largest oil company, it will have to boost its production, at least up to LUKOIL levels”, adds Victor Markov, Analyst of IC Zerich Capital Management.