Oil company Rosneft has begun finalizing a deal to acquire 100% of the shares in the Severnaya Neft (Nortern Oil) company. According to Rosneft's press office, the stake will cost USD 600 million.
The purchase of Severnaya Neft, which is connected to Rosneft's long-term plans to develop oil and gas extraction and strengthen its business, is mentioned in a press release. The Timan-Pechora oil and gas province is one of the most promising regions in Russia in terms of hydrocarbon reserves. Rosneft's development strategy, which has been approved by its board of directors, also calls for the complex development of its production capacity in various Russian regions, including in the north and north-west of Russia.
Rosneft, which is 100% owned by the government, has significant stakes in Arkhangelskgeoldobycha (25%) and Polyarnoe Siyanie (20%), and is implementing, on equal terms with Gazprom, a project to develop the Prirazlomnoye and Shtokmanovskoye fields in the Barents Sea, which is unique in terms of the scale of investment. It is also constructing an oil refinery in Primorsk (Leningrad Region) jointly with Surgutneftegaz. Rosneft has an extensive network of filling stations in the Murmansk and Arkhangelsk Regions and an export terminal in Arkhangelsk.
Severnaya Neft has a license to develop 15 oil fields in the Timan-Pechora oil and gas province and extracts oil and gas in the Komi Republic and the Nenets Autonomous District. The total volume of the company's category C1 and C2 recoverable oil reserves is over 120 million tonnes. 5 licenses were received when the company was created in 1994, and 10 have been acquired in tenders and auctions. Since 2001 Severnaya Neft has produced commercial grade oil which it provides directly to Transneft's pipeline network. Severnaya Neft has its own pipeline system over 300 kilometres long. The company is significantly developing its production volume every year. in 2002 it increased production by 35%: 1.5 million tonnes of oil was recovered. In 2003 it plans to increase production by 1.5 times, and in 2005 to reach production of 6 million tonnes. In 2002 the company prepared and brought into trial exploitation two fields in the Val Gamburtseva area.
The legality of Severnaya Neft's acquisition in 2001 of a license to develop the fields in the Val Gamburtseva area is being disputed in court by the Russian Natural Resources Ministry and LUKoil. At the moment the case is being examined by the presidium of Russia's High Administration Court.