Irkutsk Oil Company’s strategy is to achieve a steady increase in reserves and production in accordance with the Development Plan. All projects in the Development Plan are being carefully planned and implemented while incorporating the applicable health, safety, and environmental standards.
The key elements of the Irkutsk Oil’s strategy are set forth below:
INCREASING CRUDE OIL PRODUCTION
The Company is focused on increasing short- to medium-term production of oil, condensate and LPG through the implementation of its development plan for the Yaraktinsky and other fields. The Company’s goal is to reach annual production of 3.5 mln toe (75,000 boepd) by 2015.
FURTHER INCREASE OF RESERVES AND RESOURCES
The Company will continue to focus on the conversion of probable and possible reserves to proved reserves and provide support to further production growth through further geological and appraisal work as well as application of enhanced recovery techniques. The Company has 14 subsoil licences for production, geological survey, and exploration activities. Company has successfully employed a JV strategy with partners in order to better manage typically high exploration risks and intends to continue such strategy.
DEVELOPING KEY INFRASTRUCTURE IN A COST EFFECTIVE MANNER
The Company is focused on completing and expanding several infrastructure projects: oil treatment facilities, gas treatment and gas cycling facilities, a tie-in pipeline to ESPO, intra-field oil, gas and product pipelines, and others. Major infrastructure projects are discussed in details inthe Key Projects section. Some of the projects are implemented by in-house construction units while most of infrastructure developments are contracted or subcontracted. The list of the current tenders is available at the Tender section of INK Russian web site.
Company will continue to maintain and expand its own service unit, CJSC “INK-Service”, providing majority of the drilling, work-over, and construction services to Irkutsk Oil. The Company believes that CJSC “INK-Service” represents a significant competitive advantage for the Company both in terms of cost and quality, and is a key factor in achieving sustainable production growth due to the underdeveloped drilling and other field services market in the Eastern Siberia.
EXPLOITING COMPANY’S GAS UPSIDE POTENTIAL
Monetisation of gas reserves represents one of the Company’s priorities. One of the options currently used by Irkutsk Oil is a gas cycling process implemented at the Yaraktinsky field. The process allows partial monetisation of gas reserves through stripping off and marketing of high value components of condensate and LPG and subsequent re-injection of natural gas.
Current alternatives being considered for gas reserve monetisation include among others, supplying gas for local power generation, constructing a gas-chemical facility, and utilizing the gas-to-liquids (GTL) technology. All these projects require significant capital expenditures. In order to proceed with a selected potential gas monetisation project, the Company has multiple funding options, including a potential partnership.
SELECTIVELY EXPANDING THE COMPANY’S FOOTPRINT IN EASTERN SIBERIA VIA M&A AND NEW LICENSING ROUNDS
Irkutsk Oil will continue to monitor potential acquisition targets and assets available for sale.
In addition, the Company could participate in the future in subsoil licence auctions and tenders organised by the Russian Ministry of Natural Resources and Federal Agency for Subsoil Use.
In 2011 CJSC "INK-Capital" aquired 50% stake in "Tikhookeansky Terminal", LLC, which holds a license for a geological survey, exploration and production of hydrocarbons on Ayansky (West) license block. The block is located in Kirensk and Ust'-Kut Areas, in 100km from Oil Pumping Station at ESPO pipeline. Moreover, the block is conveniently situated within the borders of Ayansky license block. The license for this block is held by "INK-NefteGazGeologiya" LLC, the subsidiary of CJSC "INK-Capital". Moreover, the Company purchased licenses for Byukskiy and Suntarskiy license blocks in 2011.
DEPLOYING HIGHLY QUALIFIED PERSONNEL AND STATE-OF-THE-ART TECHNOLOGY
The management team’s broad experience allows Irkutsk Oil to deploy the latest technology and introduce best practices with minimal disruption to its operations. Irkutsk Oil will continue to target highly qualified oil and gas specialists, which, in some cases, may be relocated to the Eastern Siberia from other regions. The list of the current openings is available at the Job offer section of INK Russian web site.
In addition, Irkutsk Oil has access to the industry's best practices and the latest technologies through its relationships with many international upstream and engineering companies.
