Gas giant to set up oil company

Alexander Ryazanov, Deputy Board Chairman of Gazprom, Russia's natural gas monopoly, told RIA Novosti that the company would consider, late in the third - early in the fourth quarter of 2004, establishing an oil company.

"I believe this issue will be considered by the Gazprom board late in the third - early in the fourth quarter of 2004, and an oil company will start being established," said Mr Ryazanov.

"We will use the available infrastructure to set up a new company to extract oil from surface oil deposits," added Mr Ryazanov.

Experts predict that the company may produce 30 to 40 million tonnes of oil and gas condensate a year. Today Gazprom produces close on 10 million tonnes of gas condensate and oil, according to Mr Ryazanov.

Mr Ryazanov added that Gazprom was developing the upper layers of gas deposits, which contained pure gas, while the deeper layers contained gas and gas condensate, the latter being in large amounts.

Mr Ryazanov believes a separate company should produce oil and gas condensate as different technology, including horizontal drilling and strata fracturing, are used in their production.

Mr Ryazanov recalled that Gazprom and the Rosneft oil company were implementing a series of joint projects among other things developing the Prirazlomnoey oil field. "These are solely oil fields, including the ones off the coast of the northern seas, for which we hold a license," said Mr Ryazanov.

"We have plants to process gas condensate, for example the one based in Surgut (Western Siberia), we have gas condensate pipelines running from Urengoi (in the north of Western Siberia), we have an appropriate infrastructure that will allow to produce high quality products for realisation on the markets among them diesel fuel, kerosene for aircraft, etc.," added Mr Ryazanov.

"We have everything to create an integrated oil company to deal with oil production and processing," concluded Mr Ryazanov.