Russian largest gas independent Novatek is considering a possible team-up with state controlled gas giant Gazprom to target highly pressurised deep formations that require advanced reservoir planning and drilling.
Speaking at an industry event in Baku, Azerbaijan last week, Novatek executive chairman Leonid Mikhelson said his company may partner with Gazprom either directly or through the Arcticgaz joint venture.
Arcticgaz is a joint venture between Novatek and Russian oil producer Gazprom Neft — in which Gazprom holds a 96% stake — that develops deep gas formations in West Siberia fields, including Samburgskoye.
Mikhelson said the proposed partnership may tap into the Achimov layers at Gazprom’s existing legacy fields, such as Urengoi.
Gas has been extracted from shallow Senoman formations at Urengoi since the 1960s and the field boasts well developed supporting infrastructure.
As well as the Achimov formations, the partnership may also develop another deep play in the Jurassic formation, which is also widespread among Gazprom’s legacy fields, Mikhelson suggested.
Developing deep assets
Deep formations such as Achimov, Jurassic and others at existing fields within West Siberia’s Nadym-Pur-Taz area hold estimated recoverable reserves of more than 4 trillion cubic metres of gas, according to reports in Moscow.
With plenty cheap conventional gas in the shallow Senoman formations still available, Gazprom has been slow to develop the deep Achimov formation at these legacy assets on its own, instead handing them to two joint ventures with foreign partners, Achimgaz and Achim Development.
Despite holding minority stakes in the two ventures, Germany’s Wintershall Dea and Austria’s OMV provided strong operational oversight and technical support until February this year, when the two companies started distancing themselves from Russian operations following the invasion of Ukraine.
While Gazprom holds a 10% stake in Novatek, the companies have not had a formal joint venture in Russia, as they are generally regarded as competitors on both the domestic and international markets.
Novatek said in early October that its gas production increased up by 3% year-on-year to more than 60 billion cubic metres between January and September this year, while Gazprom reported a 17% decline in output to 313 Bcm during the same period.
Novatek’s international exports of liquefied natural gas amounted to almost 6 Bcm between January and September, almost unchanged from the same period last year, while Gazprom reduced its exports of gas by more than 40% to 86.9 Bcm during period, according to statements from the two companies.
Earlier, Novatek reportedly petitioned Russia’s President Vladimir Putin to have licences held by Gazprom for four large and undeveloped Tambey gas fields on the Yamal Peninsula transfered to the independent.
However, Mikhelson told reporters on the sidelines of the event in Baku that the company is no longer interested in these tracts.
Sakhalin 2 lure
Still, Mikhelson acknowledged that Putin had earlier asked the government to look at options for sourcing new gas assets and adding them to the Novatek’s existing portfolio.
Mikhelson also said Novatek has not yet decided whether to partner Gazprom in the Sakhalin 2 oil and gas project in Russia’s far east by taking the 27.5% stake that the Russian government confiscated from UK supermajor Shell after ordering the project’s operator to be disbanded and replaced.
Novatek is currently carrying out its own audit of Sakhalin 2, which is planned to be completed in December at the earliest, according to Mikhelson.
Shell said in its latest financial report that, on 1 September, it advised the Russian government that it objected to the transfer of its Sakhalin 2 assets to the new operator and that it “reserved all rights and remedies”. (November 1, 2022)
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