Total, Lukoil to Drill in ‘Russian Bakken’

This article was written by Oilprice.com -- the leading provider of energy news in the world. 

Russia's Lukoil  (NASDAQOTH: LUKOY  ) and France's Total SA (NYSE: TOT  ) have reportedly signed a memorandum to develop the Bazhenov shale oil fields in western Siberia, according to Russian news agencies.  

The announcement comes after Royal Dutch Shell  (NYSE: RDS-A  ) and Russia's Gazprom Neft  (NASDAQOTH: OGZPY  )  launched drilling in January in Bazhenov, which is being compared to the highly prolific US Bakken shale.

Lukoil CEO Vagin Alekperov said the company plans to extract some 100,000 tons of oil—or 733,000 barrels—this year from Bazhenov.

According to the Financial Times, Lukoil's potential partnership with Total would "mark a change of strategy for the Russian group, which until now has opted to develop its Russian assets alone."

Total SA is represented in Bazhenov through a 16% stake in Russia's second-largest gas producer, Novatek.

The Bazhenov covers 2.3 million square kilometers or 570 million acres, which is the size of Texas and the Gulf of Mexico combined and represents an area 80 times larger than Bakken.

According to the U.S. Energy Information Administration, an estimated 75 billion barrels of technically recoverable shale oil resources may lie in the Bazhenov formation.

In early January this year, Shell and Gazprom Neft began drilling at Bazhenov through their joint venture, Salym Petroleum Development (SDP).

What all parties are eyeing is the prolific cracks and fractures in the shale, which could ease the flow of oil and lead to lower production costs, while test wells have so far been operating at around 400 bpd, which is comparable to test well averages at Bakken.

ExxonMobil has also been attracted to the area and plan to start a $300 million pilot project drilling with Russia's Rosneft this year.

Moscow has introduced tax breaks to incentivize exploration of the Bazhenov and other shale plays, while recent Western sanctions threats over Russia's annexation of Ukraine's Crimean Peninsula in March have done little to scare investors away from Russia.

Earlier this week, Siemens announced that its planned investments with Russian Railways and Gazprom would go head unhindered, and German oil producer Wintershall Holding GmbH is likewise still eyeing a deal with Lukoil.

OPEC is absolutely terrified of this game-changer
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable LANDSLIDE of profits!

 


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2899884, ~/Articles/ArticleHandler.aspx, 10/1/2014 2:36:58 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement