Petrom starts production at Kazakhstan oil field with reserves put at 2 billion dollars

June 26. Ziarul Financiar

by Andrei Chirileasa

Petrom starts production at Kazakhstan oil field with reserves put at 2 billion dollarsPetrom Bucharest (SNP), the biggest company in Romania started oil production on a new oil field in Kazakhstan, where it invested about 180 million euros, the company announced.

The proven and probable reserves of the oil field are put at 34 million barrels and could be valued at some 2 billion dollars, considering a 60-dollar/barrel price.

Initial production at this field will be of 1,000 barrels/day, which accounts for merely 0.5% of Petrom’s daily output that stood at about 187,000 barrels in the first quarter. Production will go up, however, as new drills become operational, and will reach 10,000 barrels per day in 2010. Petrom intends to boost production in the Caspian area to 20,000 barrels/day.

The drilling of the Komsomolskoe oil field in Kazakhstan could generate about 200 million dollar revenues per year for the company, starting 2010 when it will reach peak capacity, taking into account the same 60 dollar/barrel price.

Petrom posted 3.03 billion RON (720 million euro) turnover in the first quarter, down 18% compared with the same time of last year, as a result of the significant decline of the price of oil in the first few months. Net profit was down 42% to 1.02 billion RON (243 million euros).

The company’s market capitalisation stands at 3.08 billion euros.

Petrom’s hydrocarbon output has been dwindling over the last few years after an all-time high reached in the first quarter of 2006, 212,000 barrels, to the about 186,000 barrels in the first quarter of 2009. The decline was mainly because of the decrease of the domestic gas production.

The exploration and production (upstream) segment is the most important for Petrom’s business, generating the bulk of the company’s profit every year. The biggest investments that the OMV group made after taking over Petrom were precisely directed toward this segment, as the Austrians wanted to reach a steady pace of production and cut production costs by upgrading the existing drills and making new ones operational.