TNK-BP, Tymen region agree on cooperation

On Saturday Sergei Sobyanin, governor of the Tyumen region, and German Khan, executive director of the oil company TNK-BP, have inked the interaction agreement between the TNK (Tymen Oil Company)-BP (British Petroleum) company and the administration of the West Siberian gas-bearing region in the realisation of investment, production and social projects.

This agreement intends the company's involvement in the industrial development of the Tyumen region, particularly as regards the Uvat project. Joint social programmes are also intended.

"The agreement will promote industrial development in the Tyumen region and the entire Russian Federation", governor Sobyanin said at the signing ceremony.

It provides a unique opportunity for the emergence of a new extractive sector in the south of the Tyumen region. "With the existing projects we could not have developed more than the Kalchin field. It has today reached the peak of production, one million metric tons of oil," the governor said.

He characterized the Uvat field as "unique" adding that its development will call for additional expenses.

"Here, up to ten million metric tons of oil is expected to be produced annually. This will create about 8,000 jobs and increase 1.5 times the tax revenue to the regional budget. This means an entire new regional economy," Mr. Sobyanin said.

Inking of this agreement will make other oil-bearing provinces adjacent to the Uvat project more attractive, he believes.

"A new oil-bearing region cannot develop within only one site. With promising sites nearby, development will be more intensive. In this way, the south of the Tyumen region will become an attractive oil province," Mr. Sobyanin hopes.

The project, he is sure, will help build a new investment scheme, taking much of finance from offshore zones abroad and making it legally taxable.

"Thus, a legal flow of investments emerges and the capitalisationof companies increases", the governor said. "This transparent and clear investment pattern is lucrative for the company, the region and Russia."

In his turn, German Khan said that the conclusion of the agreement is the continuation of cooperation development between his company and the region. "This agreement is different from those we have signed with other regions," Mr. Khan said.

First, because it intends a longer term of realisation. "Second, because the agreement intends a new level of relations, meaning realisation of some elements of state support and launch of a new oil province," the executive director said.

The TNK-BP is the investor in the project. Investments are made by its locally registered subsidiaries - Tyumenneftegaz and TNK-Uvat. Over $320 million has been invested in the project in the first two years. The sum will go into geological and technical work, production drilling, construction of pipelines, roads and power transmission lines, prospecting and exploratory drilling.

Under the Uvat project, 300 kilometres of pipelines, at least 270 kilometres of roads, over 230 kilometres of power transmission lines will be built. The full volume of financing will be over $2 bln over 20 years.