Fulfilling the President's order

Gazprom Neft agreed with SIBUR on the utilization of associated gas in the Tyumen region

Gazprom Neft and SIBUR have finally decided to jointly build a gas processing plant to utilize associated gas from the Yuzhno-Priobskoye field. As stated in the companies' press release, the subsidiaries of Gazpromneft-Khantos and SIBUR-Tyumen-Gaza have created a joint venture, Yuzhno-Priobsky Gas Processing Plant, on a parity basis, which will take over the organization of work on the design of new capacities. The processing volume at the first stage may reach 1 billion cubic meters per year. Denis Solomatin, deputy general director of SIBUR-Tyumen-Gaza, has been appointed general director of the joint venture. The company did not disclose the cost of the project, citing the lack of project documentation. However, Interfax's source in Gazprom reported that the authorized capital of the new company is 51 million rubles, and both companies contributed funds to it.

The announcement of the new joint venture followed almost immediately after Russian President Vladimir Putin's sharp statement in early August that flaring of associated gas was an "unacceptable waste." It must be said that the state seriously decided to get oil workers to utilize associated gas, especially after the president said this in his message to the Federal Assembly in April of this year. The head of the Ministry of Natural Resources, Yuri Trutnev, promised to oblige oil companies to increase gas utilization to 95% by 2011.

For Gazprom Neft, gas utilization is an urgent problem. According to its data, last year associated gas production reached 4.5 billion cubic meters. According to the Ministry of Natural Resources, the company burns up to 65% of this raw material - this is one of the highest rates in Russia.

The companies had been planning to create a joint venture for several years. SIBUR discussed the first plans to implement a joint venture on the basis of the Noyabrsky gas processing plant back in 2004 with the former management of the oil company, then called Sibneft. During this time, Sibneft managed to change both owners and name, but the joint venture was never created. On October 15 last year, at the ceremonial signing of an agreement on the creation of a similar joint venture with TNK-BP, the former head of SIBUR, Alexander Dyukov, told reporters that such an enterprise could appear in early 2007. However, on the same day, Alexander Ryazanov was fired from the post of president of Gazprom Neft, and Mr. Dyukov himself took his place. Since then, the creation of the joint venture has stalled, which is strange: after all, the top managers of both companies are practically one team.

Gazprom Neft says that several options for joint cooperation were considered. “As a result, we considered that the construction of new facilities is the most profitable,” the company’s press service notes. The companies do not yet know what principles the joint venture will operate on and how production will be divided. According to a SIBUR representative, the joint venture is yet to order design documentation for the construction of this plant. The parties also did not disclose the deadline for preparing the project. One option could be the production sharing principle used by SIBUR in its joint venture with TNK-BP (top management of the gas and petrochemical company has repeatedly said that all joint projects will be built according to similar scenarios). In this case, TNK-BP receives dry gas after processing, and SIBUR receives liquid fractions. This option may suit Gazprom Neft, which, thanks to the efforts of Mr. Ryazanov, has the status of an independent gas producer.

Anna GORSHKOVA