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Blocks offered for geological study at the expense of licensees

On 11 August 2009 the Ministry of Natural Resources of the Russian Federation (www.mnr.gov.ru) published the list of blocks offered for geological study at the expense of licensees. The deadline to submit applications is 9 October 2009.

The list contains 92 insufficiently explored and unexplored oil and gas blocks. The majority of the offered areas (51 blocks) are located in Khanty-Mansiysk Autonomous Area. These blocks contain 16.8 million tons of oil C3 prospective resources prepared for drilling. Regarding lower categories D1+D2, Khanty-Mansiysk blocks are said to contain 288.1 million tons of oil resources and 44.8 bcm of gas resources. 21 blocks are located in KomiRepublic, with oil resources forecast at 12.9 million tons and gas resources forecast at 11 bcm for prospective D1+D2 resources. Also the list contains eight blocks offered in Nenets Autonomous Area, where oil D1+D2 resources led 49.3 million tons and gas D1+D2 resources totalled 10.7 bcm.


Blocks offered for geological study at the expense of licensees in Khanty-Mansiysk Autonomous Area (red shading). Source: PetroView®

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Blocks offered for geological study at the expense of licensees in KomiRepublic (red shading). Source: PetroView®

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Blocks for Geological Study at the Expense of Licensees by regions
Reserves
Region Blocks Oil (mmt) Gas (bcm) Cond (mmt)
    C3 D1loc D1+D2 D1loc D1+D2 D1loc
Khanty-Mansiysk Autonomous Area 51 16.8 0.0 288.1 0.0 44.8 0.0
Komi Republic 21 0.0 0.0 12.9 0.93 11.0 0.12
Nenets Autonomous Area 8 3.7 5.0 49.3 0.47 10.7 0.0
Perm Territory 6 0.0 5.9 1.2 11.6 2.6 0.0
Chechen Republic 2 3.0 0.0 0.0 0.0 0.0 0.0
Kaliningrad Region 2 0.16 0.15 0.0 0.0 0.0 0.0
Krasnoyarsk Territory 1 0.0 0.0 4.4 0.0 16.6 0.0
Volgograd Region 1 0.0 0.0 1.0 0.0 2.0 0.0
Total 92 23.7 11.0 357.0 13.0 87.7 0.12

A Geological Study Licence grants the holder the non-exclusive right to undertake prospecting activities and appraisal operations in respect of a discovery. Activities undertaken must be aimed at determining whether discoveries are capable of being commercially developed and determining the preliminary boundaries of the discovery. In the event of a discovery, the licence holder may be granted an exploration and production licence, in respect of the area of the discovery, without the need for a tender or auction, at the government's discretion.

Geological Study and Exploration Licence investments are risky and typically involve long-term plans, so companies have shown limited interest in such projects while market conditions are still weak and the oil price is hard to predict. In fact, a very few blocks have been licensed for geological studies at the expense of licensees in 2009.

But some factors may serve as additional stimuli. These factors include an easy access to oil and gas infrastructure, availability of geological data, the results of regional prospecting, the quality of prospective oil and gas structures and the quality of resources. Whilst these are mostly technical matters, governmental economic and legal stimuli might play the most important role in exploration activities in Russia. That would finally ensure proper hydrocarbon reserve replacement and a sustainable oil and gas exploration and production business in Russia.

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