Gazprom Head Discusses with Irkutsk Governor Prospects of the Company''s Participation in the Kovykta Field Development
29 Jan 2004
Gazprom OJSC Board Chairman held a working meeting with the Irkutsk Region Governor Boris Govorin in Moscow on January 28, the company''s news release says. The parties discussed prospects of Gazprom''s participation in development of the Kovykta gas condensate field (the license is held by RUSIA Petroleum OJSC a majority stake in which is held by TNK-BP). The parties pointed out at the meeting that issues related to the Kovykta field development should be addressed Proceeding from comprehensive development of East Siberian and Far Eastern fields, the announcement goes. The meeting discussed the possibility of Gazprom''s participation in the region''s gasification and priorities of development fields in the Irkutsk Region (including small and medium one), taking into account the primary need to deliver gas to Russian consumers. A. Miller and B. Govorin agreed to draft and sign this February a cooperation agreement between Gazprom OJSC and the Irkutsk Region. According to the RF Government Resolution dated July 16, 2002, Gazprom is the coordinator in implementing the program to develop gas resources of Eastern Siberia and Far East, to set up the gas supply system for Russia''s eastern regions and to secure a single export channel for gas supplies to markets of the Asian and Pacific region. As was announced earlier, the Irkutsk Region and TNK-BP intend to establish East Siberian Gas Company to act as operator of a regional portion of the Kovykta project. The idea is to found the company on a parity basis. Additionally, the regional administration and TNK-BP proposed to Gazprom to become a founder of the enterprise. Capital spending on the regional project is estimated to come to USD 676 million during 2004/2034, including USD 480.4 million in 2004/2006. First gas supplies from the Kovykta field to the Irkutsk Region market may start as early as in 2006 in the amount of 300 million cubic meters. In 2007, the scope of supplies to the regional market will hit 2 billion cubic meters and will be brought to 2.2 billion cubic meters by 2009. The project''s payback period is equal to 8-9 years if gas price stands at USD45-50 per thousand cubic meters and IRR of 18%-19%. The Kovykta gas price of USD50 per thousand cubic meters in the domestic market will be competitive. The major stockholders of RUSIA Petroleum OJSC are TNK-BP (63%), HK Interros (25.82%), and the Irkutsk Region Committee for State Property Management (11.24%). Source INTERFAX
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