Total is paying off

The Russian budget received an additional $70 million from the Kharyaga field

The French Total seems to have managed to convince Russian officials that it is qualitatively developing the Kharyaga oil field on production sharing terms and is ready to share profits with the state. Yesterday, the Ministry of Industry and Energy, which oversees the implementation of the PSA, reported that the French company transferred about $169 million to the Russian budget last year. This amount is almost $69 million more than what Total planned in August last year. The Ministry of Industry and Energy says that they are satisfied with the results of the operator’s activities, because this is the first profit from the project. In addition, officials approved the cost estimate for the Kharyaga project for 2007 in the amount of $146.5 million, while last year the costs were $116 million.

The state's claims against Total began several years ago - the Ministry of Natural Resources accuses the company of lagging production behind the approved schedule. Last year, Kharyaga produced about 895 thousand tons, although the company planned more than 1 million. The French explain the lag, firstly, by the delay in the process of agreeing on plans for the project, and secondly, by the inability to agree with Transneft on an increase quotas for pumping oil through main pipelines. Currently, the quota for Total is 1 million tons per year, although the license contains a maximum annual production of 3.5 million tons.

The Ministry of Natural Resources responded by stating that Transneft’s quota has nothing to do with production figures. According to the ministry, the company does not comply with the volume of well commissioning and water injection into the reservoir specified in the project, and also does not apply new field development technologies. As a result, the efficiency of using production wells does not exceed 70%, and the production volume is 10-20% lower than the pumping quota. In December last year, the head of Rosnedra, Anatoly Ledovskikh, threatened Total with revoking its license. According to him, in February of this year, the Rosnedra commission will review the progress of the Kharyaga project and if it finds violations, it will send a petition to the Ministry of Industry and Energy for early revocation of the license. At the same time, Mr. Ledovskikh noted that the commission cannot independently cancel the license, since the project is being developed under the terms of the PSA (which, as is known, has the status of law).

Yesterday, representatives of Rosnedra were unavailable for comment. But the press service of the Ministry of Natural Resources noted that Rosprirodnadzor has already sent a request to Transneft asking for information about quotas for the French company. The answer has not yet been received, but if Transneft confirms that quotas are exceeding production, Rosprirodnadzor will organize an inspection of this project.

The Ministry of Industry and Energy seems to be ready to accept the lag in production at Kharyaga. As the ministry said in a statement, Total was instructed to send by the end of the first quarter to the Central Committee for Subsoil Exploration (CCR) under Rosnedra a new technological scheme for field development, which would specify the actual volume of oil production. Thus, this year, according to the French company, it is planned to extract more than 1 million tons, by 2010 - about 1.5 million tons, which is 2.5 million tons less than the old scheme assumed. At the same time, the Ministry of Industry and Energy emphasizes that not only the operating company is interested in changing the scheme, but also the state as the recipient of profitable oil.

As Vremya Novostei was told by the Central Research Committee, the old Kharyaga development scheme will remain in effect until the end of this year. During this time, Total must approve the new project scheme, but this will be difficult. “There are much more serious problems there than just the lack of pumping capabilities,” the commission notes. Total already tried to submit a new scheme to the CCR last spring, but to no avail. If this is not done, then the company’s work in Russia may be called into question. Moreover, if oil prices fall, budget revenues may decline sharply.

Anna GORSHKOVA