Transneft plans boost in oil output

Tatneft plans a 1% yearly increase in oil pumped in each of the next two years thanks to use of the latest technology. As reported to Rosbalt, the output increase is an element in the company's financial plan for 2004-2005, which was reviewed Wednesday at a meeting of the company's directors.

Along with the increase in the volume of oil pumped, the firm expects a 10% lower extraction cost per tonne of oil, assuring Transneft's financial stability while achieving annual profits in the range of USD 500 million-600 million. The budget assumes that, for the next two years, the price of oil on the world market will be USD 21 a barrel and USD 93 a ton on the domestic market. However, as earlier stated by Shafagat Takhautdinov, Tatneft's general director, the company's plans would remain firm even at a world price of USD 14-16 a barrel.

To achieve the optimal reduction of expenses, the company plans an audit of its stock of unprofitable wells. Experts estimate that these currently amount to 30%-50% of all Tatneft's wells. Pumping is to be discontinued at these sites, with the freed equipment used to increase the output of profitable wells. The company is assuming a reduction in drilled meters from a current 600,000 to 520,000 metres.

For 2003, Tatneft expects to pump 24.6 million tonnes of oil worth approximately USD 367 million. Tatneft pumped 12,228 million tonnes of oil in the first half of 2003, an increase of 20,000 tonnes over the same period the year before. In all, 205 new wells were brought into production and 391,000 drilling meters recorded.

Shareholders: 31% of Tatneft shares are held by Tartarstan's Ministry of Property Relations, 8% belong to company staff, more than 6% to the TAIF group of companies, with the remaining stock distributed among some 75,000 physical and legal entities.

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