Russia: OIL COMPANIES CUT DRILLING VOLUMES
MOSCOW, November 15 (RIA Novosti) - Russian oil companies are less interested in unexplored deposits and are not drilling new wells. In the first nine months of the year, they reduced the amount of drilling by 4.7%, compared with last year. The most significant contraction happened in trial drilling, which fell by 20.6%. Production drilling went down by 3.4%, Vedomosti writes.
Yukos posted the most significant contraction in drilling volumes at 32% overall (31% in production drilling and 41% in trial drilling). "The accounts of our subsidiaries are frozen and we cannot pay contractors and, so, no one will drill for us," Alexander Shadrin, the head of the company's press service, said.
Lukoil is not experiencing any such problems but has cut its drilling volumes significantly: by 8% in production drilling and by 27% in trial drilling. Even Surgutneftegaz, which is the exploration leader (it accounts for 30-40% of Russia's drilling volumes), has cut trial drilling by 9%. TNK-BP has been the sole company that has expanded drilling volumes: it has increased its production drilling by 28% and its trial drilling by almost three times, Vedomosti writes.
"Drilling a lot does not necessarily mean drilling well," a Lukoil spokesman, Gennady Krasovsky, says. According to him, in the past, when there were deductions for the replenishment of the mineral base, any company was obliged to spend funds where it produced oil, i.e., Western Siberia. Now, the expert says a company is free to invest funds in geological prospecting where it wants and, therefore, opts for new regions where a meter of drilling increases reserves by 6,000-7,000 metric tons as against 200-400 in Siberia.
One reason why oil companies are displaying increasingly less interest in prospecting is that world oil prices remain high, the Energy Ministry says. Companies are concentrating on producing oil and exporting it rather than on expanding reserves. Another reason is poor legislation in the sphere of taxation and subsoil use.