GAZPROM EP INTERNATIONAL A n n u a l
R e p o r t
2 0 0 9
GAZPROM EP INTERNATIONAL \ Annual Report 2009
MANAGING DIRECTOR'S MESSAGE Dear Ladies and Gentlemen,
In 2009, Gazprom EP International continued its growth as an integral part of OAO Gazprom Group, enhancing its positions on the international market. In connection with the decision made by the sole shareholder - OAO Gazprom, the company previously known as Gazprom Netherlands B.V. was renamed Gazprom EP International B.V. This was done in order to enhance the We began exploration on the El Assel block in Algeria, conducting an extensive 3D seismic survey. The contract for the development of this project was signed with the Algerian Agency for the Development of Hydrocarbon Resources (ALNAFT) and the Algerian State Petroleum Company, Sonatrach, in January 2009. During the official visit of the President of the Russian Federation, Dmitry Medvedev, to Abuja in June 2009, Gazprom Oil and Gas Nigeria (wholly-owned by Gazprom EP International) and the Nigerian National Petroleum Corporation (NNPC) signed documents on establishing a Russian-Nigerian joint venture. Geodata Technical Serviced Ltd., another joint venture formed in Nigeria, specializes in providing geotechnical services. In Venezuela, a joint service company called Servicios Venrus S.A. was set up with Venezuelan State Petroleum Company PdVSA. 2009’s results enable us to look to the future with confidence and set ambitious targets for the coming year. We will continue on this course, and I would like to express my gratitude to all Gazprom EP International staff for their good work in 2009.
And I would like to wish you a successful 2010!
Boris Ivanov MANAGING DIRECTOR
3
GAZPROM EP INTERNATIONAL \ Annual Report 2009
company’s recognition on the international market and reflect the nature of its main activity.
4
GAZPROM EP INTERNATIONAL \ Annual Report 2009
TABLE OF CONTENTS About Gazprom EP International.....................................................................6
Corporate Governance.........................................................................6
Mission, Strategy, and Targets..............................................................7
Corporate Values..................................................................................8
Highlights of the Year............................................................................9
Project Geography. Development Prospects ................................................11 Africa...................................................................................................12
Libya.........................................................................................13
Algeria......................................................................................18
Nigeria......................................................................................20
Namibia....................................................................................23
Latin America.......................................................................................24
Venezuela..................................................................................25
Bolivia ......................................................................................28
Brazil.........................................................................................29
Social Responsibility ......................................................................................30 Financial Statements......................................................................................31 Abbreviations.................................................................................................35
5
GAZPROM EP INTERNATIONAL \ Annual Report 2009
CORPORATE GOVERNANCE
GAZPROM EP INTERNATIONAL \ Annual Report 2009
Supervisory Board Andrey Kruglov Deputy Chairman of OAO Gazprom Management Committee
Andrey Akimov Chairman of OAO Gazprombank Management Committee
Alexander Medvedev Deputy Chairman of OAO Gazprom Management Committee
Vasiliy Podyuk Member of OAO Gazprom Management Committee
Management Board Boris Ivanov Managing Director Gazprom EP International B.V.
Karel Bernard van Polanen Managing Director Gazprom EP International B.V.
6
ABOUT GAZPROM EP INTERNATIONAL Gazprom EP International B.V. (formerly Gazprom Netherlands B.V.), a wholly-owned subsidiary of OAO Gazprom, is involved in exploration, acquisition, integration, and further management of international oil and gas assets.
MISSION STRATEGY The strategy of Gazprom EP International is to enhance the scope of the oil and gas business beyond Russian borders. The company continues to base its operations on initiatives that support the strategic aims of: Effective and transparent management of international projects in the interest of OAO Gazprom; Diversification of the resource base and sale markets; Updating a project-oriented business model; Integration of the project production chain for the purpose of ownership and management of OAO Gazprom Group’s international assets.
TARGETS Increase OAO Gazprom’s share value by maximizing the price of international oil and gas assets; Enhance the resource base and sale markets abroad; Develop cooperation with international petroleum companies, both state and private; Adopt advanced global practices of asset management; Seek and attract partners for risk allocation; Introduce cutting-edge technology; Comply with high safety and environmental protection standards in regions where present.
7
GAZPROM EP INTERNATIONAL \ Annual Report 2009
The mission of Gazprom EP International is dedicated to assisting OAO Gazprom with its transformation into a global energy company, bearing a presence in key regions of oil and gas production.
CORPORATE VALUES Respect
Social Responsibility
We recognize the value of our employees when it
We contribute to the development of regions where we
comes to the success of the company. We respect
are present, participating in social programs. We strive
and appreciate the opinions of our employees,
to improve the quality of life in local communities.
shareholders, and partners. We find this policy crucial for promoting effective teamwork and joint operations.
Safety, Health, and Environment
We work in close collaboration with other subsidiaries
We operate our business in a manner consistent with
GAZPROM EP INTERNATIONAL \ Annual Report 2009
of OAO Gazprom to achieve our corporate goals.
safety requirements and ecological norms practiced in the Russian Federation and in other countries where
Professionalism
the company is present. We recognize that safety
We are aware that professionalism is key to the long-
guarantees, health of our workers, and environmental
term success of the company.
protection is the responsibility of every employee.
Competitiveness We utilize advanced industry technologies and study the practices of leading global companies. We adhere to a policy of effective cost management.
8
HIGHLIGHTS OF THE YEAR - 2009 JANUARY
MAY
Algeria. On January 17, Gazprom EP International,
Algeria. Following a decree from the President
the Algerian Agency for the Development of
of Algeria, Gazprom EP International assigned its
Hydrocarbon Resources, and the Algerian State
rights and obligations under the exploration and
Petroleum Company, Sonatrach, signed an agreement
production agreement for the El Assel area, and
for the transfer of rights for hydrocarbon exploration
obtained operator status in the project.
and production on the land area of El Assel. signed with Oando PLC for cooperation in exploration
Libya. On June 25, the subcontractor WesternGeco
and production.
completed a field seismic survey in License Area 64. That enabled Gazprom Libya (a subsidiary of Gazprom
FEBRUARY
EP International)
to fulfill its obligations under a
Nigeria. Gazprom Oil and Gas Nigeria participated in
contract to conduct field seismic work in the area.
the annual conference and exhibition “Nigeria Oil and
Nigeria. On June 24, during the official visit of the
Gas 2009”.
President of the Russian Federation to Abuja, Gazprom Oil and Gas Nigeria and the Nigerian National Petroleum
MARCH
Corporation signed documents on establishing a
Nigeria. On March 17-18, Gazprom EP International
Russian-Nigerian joint venture.
took part in the 3rd Session of the Russian-Nigerian
Bolivia. A geological expedition to the Azero block
Intergovernmental Commission on Trade, Economic
with the participation of experts from Gazprom Latin
and Scientific Cooperation held in Moscow during
America, YPFB, and OAO Gazprom was successfully
the official visit of the Minister of Foreign Affairs of
completed.
Nigeria Ojo Maduekwe.
JULY
APRIL
Venezuela. On July 27, during the official visit of Russian
Nigeria. Gazprom Oil and Gas Nigeria (a wholly-
Deputy Prime Minister Igor Sechin to Venezuela,
owned subsidiary of Gazprom EP International) pre-
Gazprom Latin America and PdVSA Servicios signed
qualified for tender of projects within the Nigerian
an agreement to form the joint venture Servicios
natural gas industry’s general plan for development.
Venrus S.A.
Bolivia. Gazprom Latin America B.V. (a subsidiary of
Sudan. Gazprom EP International received an invitation
Gazprom EP International), OOO Gazprom-VNIIGAZ,
from the Ministry of Energy and Mineral Resources of
and YPFB signed a trilateral agreement laying out
Sudan to visit the country. During this visit a number
cooperation in shaping the Bolivian natural gas
of meetings were held to discuss opportunities to
industry’s general plan for development .
develop oil and gas projects in Sudan.
9
GAZPROM EP INTERNATIONAL \ Annual Report 2009
JUNE
Nigeria. A Memorandum of Understanding was
HIGHLIGHTS OF THE YEAR - 2009
GAZPROM EP INTERNATIONAL \ Annual Report 2009
AUGUST
NOVEMBER
Nigeria. On August 5, the consortium comprised of
Libya. On November 9, the results of 3D seismic data
Gazprom Oil and Gas Nigeria and Oando PLC was
cube work in License Areas 19 and 64 were presented
prequalified by the Nigerian National Gas Corporation
at the Annual Committee of the NOC.
for tender of construction of the Calabar-Ajaokuta
Algeria. Enageo began a 3D seismic campaign.
pipeline.
Through competitive bidding the tender for drilling
On August 20, the joint venture for processing and
services in the El Assel area was awarded to the
interpretation of geological data – Geodata Technical
Italian company Saipem.
Services Limited (a JV between Gazprom Oil and Gas
Nigeria. From November 2-5, Gazprom Oil and
Nigeria and the Nigerian company Geokinetik) – was
Gas Nigeria participated in the conference “Africa
registered.
Upstream 2009”.
On August 21, a joint venture between Gazprom Oil and
The Republic of Guinea. On November 13, Gazprom
Gas Nigeria and NNPC named Nigaz Energy Company
EP International was invited to hold negotiations with
Limited was registered.
the delegation of the Republic of Guinea during its
Venezuela. RyderScott commenced certification of the
official visit to Moscow to discuss prospects of the
Ayacucho-3 block reserves.
presence of OAO Gazprom in the country. Iran. On November 30, Gazprom EP International
SEPTEMBER
took part in the 8th Session of the Russian-Iranian
Algeria. Through competitive bidding the tender
Intergovernmental
for a 3D seismic survey in the El Assel area was
Economic Cooperation that was held in Tehran.
Committee on Trade and
awarded to Enageo.
DECEMBER
Bahrain. Gazprom EP International received an invitation from the Minister of Oil and Gas of Bahrain
Libya. Gazrpom Libya, Etelaf, and Eriel signed a
to visit the country. During this visit OAO Gazprom
trilateral agreement for carrying out drilling work in
and the State Petroleum Company of Bahrain
License Area 64.
BAPCO discussed prospects for joint cooperation in
Algeria. Preparatory drilling work began at the first
the Persian Gulf and other countries.
exploration well site in the El Assel area.
OCTOBER Nigeria. On October 10, the Managing Director of Gazprom Oil and Gas Nigeria and the Governor of the State of Rivers signed a Memorandum of Understanding to construct a plant for the production of absorbents to clean up oil spills. The consortium comprised of Gazprom Oil and Gas Nigeria and Oando PLC submitted an offer to
10
PROJECT GEOGRAPHY Gazprom EP International operates projects in Africa (Libya, Algeria, Nigeria, Namibia) and Latin America (Venezuela, Bolivia, Brazil).
Gazprom EP International’s project portfolio is primarily comprised of exploration stage and production assets as
GAZPROM EP INTERNATIONAL \ Annual Report 2009
well as projects related to providing services for the oil and gas industry.
11
AFRIСA Africa’s drill-proven oil reserves are estimated to be 117 billion barrels, and its natural gas reserves – 494 trillion cubic feet (as of January 1, 2009). Leading data does not fully reflect the actual oil and gas potential of this continent since African resources are considerably underexplored. Hydrocarbon fields have been discovered in 19 countries. Nigeria, Algeria, and Libya hold the leading positions. Existing data suggests that East, Northeast, and Western Africa also contain oil and gas resources. It is therefore reasonable to expect that in the nearest decade, Africa may double its oil and
GAZPROM EP INTERNATIONAL \ Annual Report 2009
gas resources with the growth of exploration.
Algeria
Libya
El Assel
Area 19
Awarded in December 2008
Awarded in December 2006
Operator: Gazprom EP
Operator: Gazprom Libya
Area 64
International
Awarded in December 2007
Nigeria
Operator: Gazprom Libya
Cooperation
Concessions NC 96-97
JV between Gazprom Oil and
OAO Gazprom and BASF agreed
Gas Nigeria and NNPC
on an asset swap under which
Prospects
Gazprom acquired a 49% stake in concessions
Participation in exploration and production assets
Production assets
Gathering and processing of
Additional prospective
associated petroleum gas
structures exist
Prospects
Pipeline construction
Memorandum of
Namibia
Understanding with NOC
Prospects
Acquisition of new exploration assets and assets with drill-
Kudu integrated gas project
proven reserves
12
LIBYA GAZPROM LIBYA Gazprom Libya was founded in December 2006. The company’s main activity is the operative management of exploration work in License Areas 19 and 64 in Libya. Throughout 2009, Gazprom Libya used its office work. By the end of the year, the international office staff totaled 40 experts. Seismic Research Vessel GeoChallenger
Area 19 (EPSA) In December 2006, Gazprom Libya was awarded a hydrocarbon exploration and production license for Libya’s offshore Area 19 in the Mediterranean Sea. In March 2007, Gazprom Libya and the National Oil Company signed EPSA-IV (PSA Type IV). The licenses area covers 10,300 km². Oil and gas potential is thought to be associated with the Cretaceous and Tertiary complexes. A number of prospects in other intervals exist. On December 29, 2008, the GeoChallenger seismic vessel completed a 3D marine seismic campaign in License Area 19. The survey covered the area of Gazprom Libya Office in Tripoli
5,000 km². Throughout 2009, acquired seismic data was processed and further interpreted under the control of Russian experts in the CGGVeritas processing center in Tripoli. Gazprom Libya has successfully fulfilled its contract obligations to conduct its seismic survey in License Area 19.
13
GAZPROM EP INTERNATIONAL \ Annual Report 2009
staff in Tripoli for the implementation of exploration
LIBYA In 2009, experts from Gazprom Libya
conducted
additional analysis of available 2D seismic (over 20,000 line kilometers) and well data (over 35 wells). With the geological and geophysical data collected and summarized, the geological and tectonic model of the eastern part of the Pelagian basin was detailed with the intent to analyze the nature and peculiarities of
GAZPROM EP INTERNATIONAL \ Annual Report 2009
the petroleum system of this area. In November 2009, based on this analysis, a number of key targets in main objective intervals were identified. Three - the most prospective - were recommended for drilling. 2D and 3D Seismic Coverage. Area 19
Over the year, Gazprom Libya continued active preparatory work for the upcoming drilling campaign planned for summer 2010. The main contracts that were signed in 2009 included the contract for delivery of casing and other tubing signed with Tenaris, for provision of marine vessels with Burbon Offshore, for manufacturing and delivery of wellheads with Vetco, and for various drilling services with Halliburton, Schlumberger etc.
Processing and Interpretation of Seismic Data
14
LIBYA Area 64 (EPSA) In December 2007, Gazprom Libya was announced as the winner of the fourth open gas tender for hydrocarbon exploration and production in onshore area 64 (blocks 1, 2, and 3) in the Ghadamis Basin. In February 2008, Gazprom Libya signed a EPSA with the National Oil Company. potential is associated with the Silurian deposits. In September 2008, through competitive bidding, the
Field Seismic Survey. Area 64
contract for a field seismic survey and data interpretation was awarded to WesternGeco. The field survey, which
Apart from processing acquired 3D seismic data, the
began in 2008, was successfully completed in June 2009.
team of geologists and geophysicists completed complex
Over 8 months, 3,405 km² of 25-fold data and 890 km²
interpretation of older 2D seismic (around 24,000 line
of 50-fold data were processed.
kilometers) and well data in order to generalize the
During the period of January to November 2009,
regional geological and geophysical data (to create a
acquired seismic data was processed and further
regional geological database), elaborate the geological
interpreted at the WesternGeco processing center in
and tectonic model of an extensive (over 80,000 km²)
Tripoli under the control and in collaboration with the
part of the Ghadamis Basin, and analyze the nature and
Gazprom Libya interpretation center.
peculiarities of the petroleum system.
Field Seismic Survey. Area 64
15
GAZPROM EP INTERNATIONAL \ Annual Report 2009
The license area covers 4,000 km². Main oil and gas
LIBYA Pursuant to EPSA obligations, the exploration program in Area 64 includes the drilling of 6 exploration wells. During the year under review, a large number of contracts for delivery of equipment and materials and for services associated with drilling work were signed. The drilling campaign in this license area is planned for June 2010.
GAZPROM EP INTERNATIONAL \ Annual Report 2009
The number of tenders conducted over 2009 was 19. The total price of all contracts signed surpassed $38 million, and included contracts for the delivery of casing, wellheads, service contracts, and for drilling
Field Seismic Survey. Area 64 These effectively conducted tender campaigns
and well testing operations.
resulted in the signing of contracts terms favorable
At the end of December 2009, Gazprom Libya, Etelaf,
for Gazprom EP International and, at the same time,
and Eriel signed a trilateral agreement to perform
observe the best industry quality standards.
drilling work in Area 64, with Etelaf acting as general contractor and Eriel as subcontractor, providing its drilling rig and basic drilling personnel. Furthermore, Gazprom Libya signed a contract for material and technical base and logistic services related to drilling operations in the license areas.
16
LIBYA Concessions NC96 and NC97
production decline rate (infill drilling, water injection, gas lifting, etc.).
In December 2007, as a result of an asset swap with concessions NC96 and NC97 owned by Wintershall A.G.
Following the long-term development plan, exploration
Wintershall A.G. is a wholly-owned subsidiary of the
work in these concessions is still underway and certain
joint stock company BASF with more than 75 years of
actions are taken to develop the infrastructure of oil
experience working in the exploration and production of
fields.
oil and gas.
In accordance with governmental policy, since 2008 all
For the purpose of direct ownership of Gazprom shares,
oil and gas production projects with the participation of
a special vehicle company - Libyen Verwaltungs GmbH -
foreign companies working under old production sharing
was established.
agreements have been gradually converted into EPSA-IV
The aforementioned oil concessions include the following
contracts.
fields: As Sarah, Jakhira, Nakhla, Tuama, and Hamid, as
Since concession agreements expire in 2026, Wintershall
well as a number of smaller ones with letter-names: N, P,
A.G. made it a basic condition when moving to new
N, Q, P, and R.
EPSA-IV contracts that the economics of a project remain
In 2009, hydrocarbon production in the company’s stake
unchanged for investors. Finalization of negotiations in
totaled: for oil – 2 million tons (14.66 million barrels), for
respect to new EPSA-IV contracts is anticipated in the first
condensate – 0.1 million tons (0.73 million barrels), and
half of 2010.
for gas – 274 million cubic meters (9,672 million cubic
Prospects for Development
feet) from both concessions. During 2009, oil production was kept within limits set
Gazprom EP International, bearing in mind the fact that
forth by OPEC quotas and NOC instructions.
Libya occupies a strategic position, pursues exploration
The proven hydrocarbon reserves of the company at the
opportunities to enhance its presence in the country and
end of 2009 were estimated at: oil – 118.9 million barrels,
optimize its asset portfolio in this region.
condensate – 10 million barrels, and gas - 2.80 billion
Following the agreements set forth in the Memorandum
cubic meters (98.84 billion cubic feet) (in its 49% stake).
of Cooperation signed in 2008 by OAO Gazprom and
Production operations in these concessions have been
the Libyan National Oil Corporation, Gazprom EP
carried out since the 1960s. To date, the main production
International keeps analyzing prospects for participation
output is provided by two major oil fields - As Sarah
in the development of already-discovered oil and gas
and Jakhira - which have already fallen into declining
fields and in projects related to the development of the
production. In this respect, a number of short-term and
gas industry in the country, including production, refinery,
long-term projects are being implemented to slow the
transportation, and distribution of products.
17
GAZPROM EP INTERNATIONAL \ Annual Report 2009
BASF, Gazprom Libya acquired a 49% stake in Libyan oil
ALGERIA Following the strategy of international business development and resource base diversification through Northern Africa, OAO Gazprom considers Algeria to be a priority country when it comes to acquisition of petroleum assets.
GAZPROM EP INTERNATIONAL \ Annual Report 2009
The proven reserves of natural gas in Algeria are estimated at 4.5 trillion cubic meters (158.85 trillion cubic feet) (holding the second place in Africa after
El Assel Area in Algeria
Nigeria). Gas reserves are mainly concentrated in the central and eastern parts of the country.
license area (blocks 236b, 404a1, 405b1) located in
With a view to establish closer cooperation and
the east of Algeria.
business contacts, in June 2008, OAO Gazprom
The El Assel Area, covering 3,250 km², is located in
opened a representative office in Algeria.
the Berkin petroleum basin. The main oil and gas
On December 13, 2009, OAO Gazprom participated
bearing sands are the Triassic, Lower Devonian and
in an international bid round for exploration and
Cambrian-Ordovician.
production of hydrocarbons in Algeria. Through
Within the limits of this license area, the Zemlet
competitive bidding, OAO Gazrpom was awarded the
Er-Rakeb oil field was discovered, and a number of
exploration and production contract for the El Assel
prospective structures have been identified.
Signing the Agreement for El Assel. January 17, 2009
18
Seismic Survey in the El Assel area On January 17, 2009, Gazprom EP International, the
Within preparatory work for the forthcoming drilling
Algerian State Petroleum Company, and the Algerian
program, a number of tenders were held including
National Agency for the Development of Hydrocarbon
those for delivery of equipment and materials and
Resources (ALNAFT) signed an agreement for the
for oil and gas services. Furthermore, Gazprom EP
transfer-acquisition of a 49% stake in the El Assel
International commenced preparatory work at the
project.
drilling location of the first well, Rhourd Sayah-2.
The main feature of this contract is that Gazprom EP
The implementation of the hydrocarbon exploration
International has consented to the contract already
and production project in Algeria will contribute to
in force and assumed obligations to fulfill its license
strengthening the company’s grip in the region.
obligations over a short period of time with a minimal
Prospects for Development
exploration program. Gazprom EP International acts as the operator
Gazprom EP International explores opportunities for
during work in the exploration stage and executes
entering other projects in Algeria, both existing and
the exploration program on behalf of the “Gazprom-
new.
Sonatrach” association.
We keep monitoring these projects. The most
In 2009, Gazprom EP International began an extensive
promising then go through detailed technical and
3D seismic survey which embodies obligations for the
economic assessment.
first and second phases of the exploration program.
19
GAZPROM EP INTERNATIONAL \ Annual Report 2009
ALGERIA
NIGERIA GAZPROM OIL AND GAS NIGERIA
GAZPROM EP INTERNATIONAL \ Annual Report 2009
Gazprom EP International carries out operations in Nigeria through its wholly-owned subsidiary Gazprom Oil and Gas Nigeria. The company was registered in 2008 to develop hydrocarbon exploration and production projects. Thanks to vigorous work, regular consultations with representatives of the presidential administration of Nigeria, key ministers, major international and local oil and gas companies, we are gradually earning a better reputation in the Nigerian oil and gas community. We regularly receive offers to acquire stakes in various petroleum assets in Nigeria. Such offers go through detailed geological and economic evaluation at our Moscow office. Gazprom EP International took part in the international exhibition “Nigeria Oil and Gas 2009” which was held in Abuja in February 2009. It was the second time the company participated in the event. Gazprom Oil and Gas Nigeria involves other companies of the OAO Gazprom Group when it comes to business development in this country. From January to February 2009, experts from OOO Gazprom-VNIIGAZ made presentations for the Nigerian Gas Company, Nigerian International Exhibition “Nigeria Oil and Gas 2009”
Power Company, Economic Community of West African States, and others.
Official Visit of the President of the Russian Federation Dmitry Medvedev to Abuja
20
NIGERIA In 2009, agreements adopted in 2008 in respect to the formation of a Russian-Nigerian joint venture reached their practical implementation. In April 2009, Gazprom Oil and Gas Nigeria and NNPC signed an agreement on basic principles for the formation of their joint venture. During the course of the year, Russian and Nigerian experts held regular consultations on a wide range of An important moment for 2009 in Nigeria was the signing of constituent documents for the joint venture between Gazprom Oil and Gas Nigeria and NNPC.
Formal Dinner in Honor of the President of the Russian Federation
The documents were signed on June 24 during the official visit of the President of the Russian Federation Dmitry Medvedev to Abuja. We managed to achieve
In October 2009, Gazprom Oil and Gas Nigeria, in
the objectives of the memorandum which was signed
association with Oando PLC, took part in a bid for
in September 2008. The documents state that the
construction of the Calabar-Ajaokuta pipeline. The
joint venture is formed on a parity basis between the
length of the main line is 395 km, and the length of
parties. The new joint company was named NiGaz
the pipeline including branch lines is 491 km, with
Energy Company Limited.
flow capacity of up to 15 billion cubic meters (529
After the documents were signed, the parties
billion cubic feet) of natural gas. This pipeline is
continued with regular consultations on issues related
regarded to be the first section of the projected Trans-
to the registration and launch of the new company.
Saharan gas pipeline and is designated to pump gas
In October 2009, the first meeting of the Board of
from the resource-rich south-east regions of Nigeria
Directors of the JV was held. The Board of Directors
to the energy-deprived northern part. The tender
approved the interim management of the company
proposal was developed in cooperation with OOO
and a list of priority projects to be launched in the
STGM (a subsidiary of OAO Stroytransgaz) and the
nearest future.
Yuzhnniigiprogaz Design Institute of Ukraine. The
At the request of our Nigerian partners, the new
results of the tender are expected in the second
company will focus on the development of gas-to-
quarter of 2010.
power projects to reduce Nigeria’s power shortfall. One of these projects is aimed at insuring uninterrupted gas supplies to two power plants, with a total capacity of 600 MW, located in the Akwa Ibom State, that will be under the joint company’s management. Another gas-to-power project based on the Colmani River gas field is currently being developed.
21
GAZPROM EP INTERNATIONAL \ Annual Report 2009
pertinent issues.
NIGERIA Gazprom Oil and Gas Nigeria develops more than just exploration activity. Throughout the year, the company held negotiations with the government of the State of Rivers over the construction of a mini-plant for production of absorbents to clean up oil spills. The production of absorbents and the creation of a training center for Nigerian ecologists aligns profit generation with the social responsibility of the company.
GAZPROM EP INTERNATIONAL \ Annual Report 2009
Joint Venture Geodata TSL In October 2009, a subsidiary company Geodata
acquisition planning; processing and interpretation
Technical Services Limited was established. Geodata
of seismic data; well data processing; secure storage
is a joint venture between Gazprom Oil and Gas
of large data sets; organization of virtual data rooms;
Nigeria and the Nigerian company Geokinetik.
investment recommendations; complex research
Gazprom Oil and Gas holds a 51% stake in this JV.
of geological data model-building; preparation of
The other stakeholder –Geokinetik – is the leader on
reports, expert opinions, etc.
the Nigerian market when it comes to exploration
We expect Geodata to become the regional center of
work and geological surveys, with more than 5 years
expertise and processing of geological data supplied
of providing onshore seismic survey services.
to the companies of Gazprom EP International Group
Geodata was formed to cater to the demand of
operating in Africa and Latin America. The team of
the growing market of seismic data processing in
experts working in Geodata may also be engaged in
Nigeria.
providing consultations on a wide range of activities
Geodata provides the following services: seismic
related to geological exploration.
Industrial and Residential Complex Geodata
Geodata Processing Center
22
NAMIBIA
On June 25, 2009, President of the Russian Federation
granted a new license for the Kudu gas project to
Dmitry Medvedev paid an official visit to the Republic of
the consortium of companies in which JV Gazprom-
Namibia. During this visit a number of documents were
Namcor will hold a 54% majority stake.
signed including a Memorandum of Understanding.
In this JV, OAO Gazprom will operate through Gazprom
This MoU was signed between OAO Gazprombank
EP International. Apart from the Gazprom-Namcor JV,
and the Namibian National Oil Corporation for the
stakeholders Tullow Oil and Itochu will have stakes of
organization of funding to construct a 800 MW gas
31% and 15%, respectively.
turbine plant. The Kudu gas field is intended to serve
License terms allow the Gazprom-Namcor-led
as a raw material base for this plant.
consortium to undertake a feasibility study for the
In October 2009, Gazprom EP International visited
Kudu gas project on a non-binding basis within
Namibia to hold negotiations to intensify energy
two years. If the project proves to be economically
cooperation. The Managing Director of Gazprom EP
feasible, the parties will sign respective agreements
International met with the President of Namibia,
with the Namibian government. Meanwhile, the
Hifikepunye Pohamba, and the Minister of Energy
license will be extended for an additional 25 years.
and Mines, Erkki Ngimtina. The President of Namibia
The power plant’s planned capacity will fully satisfy
confirmed the administrative policy of his country
Namibia’s demand for power (300 MW). While the
towards
remaining 500 MW will be exported to neighboring
the development of Russian-Namibian
economic cooperation, primarily in the energy sector.
South Africa.
Taking into account the extensive experience of OAO
This project will help transform Namibia from a
Gazprom in the energy industry, the Ministry of Energy
power importer to a power exporter, and will serve as
and Mines made an offer to Gazprom EP International
an example of practical steps taken to implement the
to join the Kudu gas project.
above-mentioned agreements.
On October 31, 2009, Minister Ngimtina formally
23
GAZPROM EP INTERNATIONAL \ Annual Report 2009
Prospects for Development
LATIN AMERICA Latin America is one of the richest oil regions in the world, both in regard to proven reserves and prospective resources. The proven oil reserves of Central and South America are currently estimated to be 123 billion barrels, and proven gas reserves are 266 trillion cubic feet (as of January 1, 2009). Despite significant geopolitical risks, the potential and business opportunities in this region continue to expand.
Venezuela
Brazil
Ayacucho-3
Entering a New Market
GAZPROM EP INTERNATIONAL \ Annual Report 2009
Agreement on evaluation and
November 2008 – Forming of
certification of heavy oil reserves
Gazprom Brazil Exploration and
Gas Production Projects
Production
Blanquilla Este y Tortuga,
Prospects
Mariscal Sucre
Evaluation of prospective
MoU with PdVSA
projects in cooperation with
Offshore gas and LNG
the Brazilian State Petroleum
production project
Company Petrobras and other
Services
Brazilian companies
2009 – formation of a joint
Bolivia
service company with PdVSA
Agreement on Examination of Blocks April 2008 – signing of agreement on examination of the Sunchal and Azero blocks
Prospects Joint projects with Total on the Ipati and Aquio blocks
24
VENEZUELA GAZPROM LATIN AMERICA Gazprom Latin America B.V. operates the projects of OAO Gazprom in Latin America. With a view to conduct activities associated with exploration, production, transportation, and marketing of hydrocarbons, OAO Gazprom opened a regional office in Caracas in 2008 through Gazprom Latin America. As a global energy company, OAO Gazprom has a
GAZPROM EP INTERNATIONAL \ Annual Report 2009
development strategy focused on building a full chain - from production to marketing of hydrocarbons on new markets - that extend beyond Russian borders. In line with this strategy, the company runs oil and gas operations in Venezuela.
AYACUCHO-3 On July 23, 2008, OAO Gazprom signed an agreement on quantitative evaluation and certification of Aycucho-3 reserves in the Orinoco oil belt through Gazprom Latin America and the Venezuelan state petroleum company PdVSA . Within this agreement, OAO Gazprom purchased a data set for this block and, using PdVSA’s technical base, completed analysis of available data. At its own expense, PdVSA drilled 6 appraisal wells. This helped to update the geological model and confirm the geological reserves of this block which amount to 5 billion tons of oil. In 2009, all work on this block was completed and the results were submitted for certification by independent auditor Ryder Scott. In the beginning of 2010, it is planned to commence a feasibility study to set up another joint venture for oil production on the block. This feasibility study will be elaborated within the agreement between OAO Gazprom and PdVSA on joint examination of Ayacucho-3 block which was made in November 2008.
25
VENEZUELA BLANQUILLA ESTE - TORTUGA
Prospects for development
On September 19, 2009, following a proposal from
In accordance with OAO Gazprom’s development
PdVSA, OAO Gazprom signed a Memorandum of
strategy, participation in LNG projects is a crucial
Understanding on the Blanquilla Este y Tortuga
direction for business development in this region.
project, envisaging natural gas production and LNG off
In 2009, Gazprom EP International, acting through
GAZPROM EP INTERNATIONAL \ Annual Report 2009
the coast of Venezuela.
Gazprom Latin America, participated in a bid for the
Once signed, the parties should examine the data
Mariscal Sucre LNG project. Mariscal Sucre is a long-
related to this project together in order to decide on
term project to extract, process, and export Liquefied
further involvement in exploration and production
Natural Gas.
activities in this region.
Gazprom EP International plans to further cooperate
In 2009, PdVSA was designated an operator of the
with the Venezuelan State Petroleum Corporation
project. Participants in the project produced an
PdVSA and explore opportunities to participate in the
estimate of resources and completed preparation of
development of similar projects.
a descriptive report with plans for geological survey work necessary for filing an application to get a license. The license was granted in December 2009.
26
SERVICE COMPANY
Sechin to Venezuela, Gazprom Latin America and
In the context of a growing service market in
PDVSA Servicios signed an agreement on founding a
Venezuela, in 2008, the service company Gazprom
joint venture in oil and gas services, named Servicios
Latin America Servicios was established. The company
Venrus (51% - PDVSA, 49% - Gazprom Latin America,
provides services for workover and maintenance of oil
Venezuelan branch). The joint venture was officially
and gas infrastructure. The company enjoys a stable
registered in December 2009.
portfolio of orders and a reputation as a reliable
The joint company provides services for PdVSA
business partner.
production facilities on a non-competitive basis in the
In 2008 in Orenburg (Russia), in the presence of the
following areas:
President of the Russian Federation Dmitry Medvedev
Installation and workover of compressor units
and the President of Venezuela Hugo Chavez,
Oil pits cleaning
Gazprom Latin America and PDVSA Servicios signed
Drilling and well workover
a Memorandum of understanding. This document
Power generation
outlines the areas of possible cooperation between the companies. In 2009, with all necessary equipment on site, Gazprom Latin America Servicios started to implement a number of contracts for the provision of technical services. On July 28, 2009, during the visit of the Deputy Prime Minister of the Russian Federation Igor Oil pits cleaning Очистка нефтешламовых амбаров
Installation and workover of compressor units Установка и ремонт компрессорных станций
Power generation Энергетика
Drilling and workover ремонт скважин Бурение и well капитальный
27
GAZPROM EP INTERNATIONAL \ Annual Report 2009
VENEZUELA
BOLIVIA Prospects for development Within the business development strategy of OAO Gazprom on foreign markets, Bolivia is a priority region. In February 2008, Gazprom Latin America opened a branch office in Santa Cruz, and in 2009, a representative office in La Paz.
GAZPROM EP INTERNATIONAL \ Annual Report 2009
In February 2007, OAO Gazprom and Bolivian State
1
Petroleum Company YPFB signed a Memorandum of Understanding taking on exploration and production of hydrocarbons in Bolivia, analysis of opportunities to participate in infrastructure projects including LNG ventures, and training opportunities for people
2
working in the oil and gas industry. On March 17 and 23, 2008, the parties signed agreements to study and evaluate the petroleum potential of the Sunchal (№23, 575 m³) and Azero (№7, 7,856 m³) blocks located in the hydrocarbon-rich Tarija region. In May 2008, OAO Gazprom (through Gazprom Latin America) and Total reached an agreement on possible participation in activity on the the Ipati and Aquio blocks.
1. Azero block 2. Ipati and Aquio blocks
28
BRAZIL
In November 2008, Gazprom EP International opened a
There is also a number of private Brazilian companies
representative office in Brazil and registered Gazprom
with whom we have dialogue regarding joint oil and
Brazil Exploration and Production.
gas projects in Brazil.
In Brazil, we maintain negotiations with the Brazilian
Gazprom EP International has signed confidentiality
state petroleum company for entering prospective oil
agreements with several of them and have purchased
and gas projects in the country and for cooperation in
data base sets. The company is currently evaluating the
Bolivia.
potential of blocks offered. No decision has been made in respect to any potential gas projects. Analysis and discussion of options and negotiations with potential partners will continue in 2010.
29
GAZPROM EP INTERNATIONAL \ Annual Report 2009
Prospects for Development
SOCIAL RESPONSIBILITY Charity work and sponsorship in the regions of the company’s presence form the basis for the sociallyoriented business of Gazprom EP International and its affiliated companies. The companies of Gazprom EP International Group actively cooperate with Russian diplomatic missions, sponsoring various cultural and charity events and
GAZPROM EP INTERNATIONAL \ Annual Report 2009
other projects aimed at the promotion of a positive image of Russia and Russian business everywhere we operate in the world. Folk Festival in Derj and the Festival of Sacrifice in Libya
In July 2009, Gazprom Libya sponsored a festival of Russian culture in Libya. Representatives of Russian folk bands took part in this festival. Likewise, Gazprom Libya provides support for the annual folk art festival in Derj. Furthermore, the company maintains regular contacts with local charity funds, providing financial support to orphans and disabled children. Every year during the Festival of Sacrifice, one of the most important Muslim holidays, Gazprom Libya hosts a number of charity events including purchasing food for needy families. We plan to continue providing targeted charitable and sponsor assistance in the regions where we operate.
30
GAZPROM EP INTERNATIONAL \ Annual Report 2009
FINANCIAL STATEMENTS
31
GAZPROM EP INTERNATIONAL \ Annual Report 2009
FINANCIAL STATEMENTS
32
GAZPROM EP INTERNATIONAL \ Annual Report 2009
FINANCIAL STATEMENTS
33
GAZPROM EP INTERNATIONAL \ Annual Report 2009
FINANCIAL STATEMENTS
34
EPSA
NOC
Exploration and Production Sharing Agreement
National Oil Company of Libya
JV
OPEC
Joint Venture
Organization of Petroleum Exporting Countries
LNG
PdVSA
Liquefied Natural Gas
Petr贸leos de Venezuela S.A., the Venezuelan State Petroleum Company
MoU Memorandum of Understanding
YPFB Yacimientos Petrol铆feros Fiscales Bolivianos, the
NNPC Nigerian National Petroleum Corporation
Bolivian State Petroleum Company
GAZPROM EP INTERNATIONAL \ Annual Report 2009
ABBREVIATIONS
GAZPROM EP INTERNATIONAL \ Annual Report 2009
GAZPROM EP INTERNATIONAL B.V. Prins Hendriklaan 28, 1075BD, Amsterdam, The Netherlands Tel.: +31 203 013 600 +7 (495) 725 7727 Fax: +7 (495) 725 77 47 info@gazprom-ep-int.com