Rosneft has discovered a strategic new field in eastern Siberia that analysts said Thursday could potentially add 4 percent to the company's proven and probable reserves.
Rosneft shares outperformed the market on the discovery of the Sevastyanovo deposit, which company spokesman Nikolai Manvelov said could hold more than 150 million metric tons of crude. This is 30 percent more than Rosneft's entire output in 2009.
"The field is large and located near the ESPO pipeline, which is designed to ship Russian oil to eastern markets," Alfa Bank oil and gas analysts said in a note.
Russia, currently the world's largest oil producer, deems oil deposits to be strategic if their reserves exceed 70 million metric tons. Their development by a foreign firm requires special governmental approval.
Natural Resources and Environment Minister Yury Trutnev told Prime Minister Vladimir Putin about the project in an address Wednesday, published on the government's web site.
"We can report today on the opening of the Sevastyanovo deposit, with reserves of more than 150 million [metric tons]. This is a strategic deposit," Trutnev said. He did not say when production might potentially begin at the deposit.
State-controlled Rosneft plans to boost oil and gas condensate production by about 4 percent to 117.6 million metric tons in 2010, largely through the ramp-up of production at its Vankor field in the Arctic.
"Sevastyanovo might be the next core growth driver for Rosneft after Vankor, providing the company with further production growth after 2015," VTB Capital analysts said.
"The discovery of a field as big as Sevastyanovo could potentially add around 4 percent to the company's 2P [proven and probable] reserves," they said.
The Sevastyanovo field, in the eastern Siberian region of Irkutsk, was discovered within the Mogdynsky license area, which Rosneft purchased at auction in 2006.
"In 2010, Rosneft plans to spend a significant amount of financial resources on exploration in eastern Siberia around Vankor, as well as in the south, in the Irkutsk region," the Alfa Bank analysts said.
"The region lacks infrastructure, and therefore fiscal incentives are crucial in order to maintain exploration momentum in the region."
Russia introduced a zero export duty for 13 east Siberian fields, including Vankor, from Dec. 1. Officials in the Finance Ministry, however, have argued that these breaks should be replaced with a uniform tax on excess profits.
UniCredit analysts said the discovery of Sevastyanovo, a field similar in size to the Salym group being developed by Royal Dutch Shell and Gazprom Neft, would support any push by Rosneft to retain the current tax breaks.
"We believe the announcement supports the company's long-term growth outlook and view the discovery as a potential argument to be used in discussions with the government on keeping the current tax breaks," UniCredit said.