Gazprom Raises Output From Arctic Fox Area of Urengoi

By Geoffrey T. Smith

Mon, Oct 23, 2006 11:49 GMT

Moscow – Russian gas monopoly OAO Gazprom (GSPBEX.RS) said late Friday it has raised production from the Arctic Fox area of its Urengoi field in Russia’s far north to its projected maximum capacity of 27.5 billion cubic meters a year.

The area in question is some 150 kilometers north-west of Gazprom’s production base at Novy Urengoi in the Yamal-Nenets Autonomous District. It is worked by 146 wells.

Gazprom said it has now commissioned four new fields and two new areas of the Yamburgskoye field in the last five years, with a total projected output capacity of 170 bcm a year.

The company has come under pressure from the government over the last year to spend more on bringing new production onstream to ensure stability of supplies to the domestic market, as well as meeting projected growth in demand for its gas from western and central Europe.

Gazprom’s output in September was up 6.6% from a year earlier. However, its record over the first nine months of the year was more modest, with production rising 6.49 bcm, or 1.6%, to 407.29 bcm. The company’s output was nearly stagnant in 2005 at 547.9 bcm.

Gazprom intends to raise its output to between 550 bcm and 560 bcm by 2010, with capital-intensive newer fields compensating for declining output at its older ones.

The company’s board last month approved raising its capital expenditures budget for 2006 to 324.93 billion rubles ($12.10 billion), with the primary aim of accelerating development of its newer fields.

These include the Yen-Yakhinskoye, Zapolyarnoye, Yuzhno-Russkoye, Bovanenkovskoye and Kharasaveyskoye fields.

It also intends to commission a new underground storage facility and start production at the Kharvutinskoye area of the Yamburgskoye field by the end of the year.