SIBNEFT. Sibneft produces some of the highest quality crude of all Russian vertically integrated companies

Sibneft produces some of the highest quality crude of all Russian vertically integrated companies. The oil produced by Noyabrsk has a low average density (0.85 tonnes per cubic metre), gravity of 35.8 degrees API, and a low average sulphur content (0.58%) relative to other Russian crude streams.

This compares with an average gravity for Siberian crude of around 31 degrees API and an average for Russia as a whole which is even lower. Noyabrsk's crude also has approximately half the sulphur content of the Russian average. The quality of our crude mixture (for 1997) is shown below.

Siberian crude could potentially be sold at a premium to other Russian crudes such as the Urals Blend. However, this advantage is lost due to state pipeline operator Transneft's practice of blending crude oil transported in its pipeline network. Sibneft stands to gain from the anticipated introduction by Transneft of a quality bank, a zero-sum system according to which producers injecting below average quality crude streams into Transneft's pipeline system must compensate producers of above average streams.

In 1998 and 1999, low oil prices forced the company to shut in a significant number of uneconomic wells, which led to further falls in production. Sibneft also undertook a radical overhaul of its operating practices, laying the groundwork for growth in 2000.

Sibneft in 2000 unveiled an aggressive new oilfield development programme, which was accompanied by a signiifcant hike in upstream investment. The company is launching production from four new fields O Romanovskoye, Yarainerskoye, East Vyngayakhinskoye and East Pyakutinskoye. In addition, the company will start production from new reservoirs recently discovered at the Karamovskoye and Kraineye fields.