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PRESS-RELEASE
27.08.2013 
BASHNEFT-POLUS BEGINS OIL PRODUCTION AS PART OF DEVELOPMENT AT TREBS AND TITOV FIELDS  

Bashneft-Polus, a joint venture of OAO LUKOIL and OAO ANK Bashneft,  began oil production as part of the development of R.Trebs and A.Titov fields in  Nenets Autonomous District. Test production is underway and is expected to reach  about 300,000 tons of oil by the end of 2013.

“The Trebs and Titov development project fits well into the company’s  strategic plans to build up production of hydrocarbons in Timan-Pechora  oil-and-gas province and increase its exports through the Varandey Terminal. The  field’s first oil proved that the ongoing cooperation in the form of  Bashneft-Polus is highly efficient,” LUKOIL President Vagit Alekperov said. 

“Acting in full accordance with the previously announced schedules  and within the timelines that are unprecedented for projects of such a scale, we  managed to create the required infrastructure and started oil production in the  Nenets Autonomous Okrug,” Bashneft’s President Alexander Korsik commented. “It  is yet more proof of how highly qualified our team is, of its vast experience in  the implementation of large-scale projects outside of the conventional regions  of Bashneft’s operations and also of the high level of interaction with our  partner, LUKOIL.”

“We are happy to state that Bashneft-Polus has become a major new  investor and taxpayer operating in Nenets Autonomous Okrug,” Igor Fedorov,  Governor of Nenets Autonomous District, empahsized. “Large-scale efforts to  develop the fields demonstrate that the license-holder is more than a  responsible producer. Bashneft-Polus is also an active side in the social and  economic partnership. The development of the two fields is a significant driver  for the development of the District’s economic potential”.

In preparation for pilot production in 2011-2013, Bashneft-Polus,  being the operator under the Trebs and Titov development project, constructed  field facilities and connected 12 exploratory wells at the R field to the  utility network. It has constructed more than 40 kilometers of gathering  lines, approximately 80  kilometers of power transmission lines, completed the  first stage of a central gathering plant (CGP) with a capacity of 1.5 million  tons per year, an oil delivery and acceptance station (ODAS) with an oil  metering station, a more than 31-kilometer-long pressure oil pipeline from the  Trebs CGP to the Varandey ODAS and also numerous auxiliary  facilities.

The oil produced at the R.Trebs field is supplied via a pipeline to  the Varandey ODAS and further on to the Varandey Oil Export Terminal. As  required by the license agreement, a volume of oil equivalent to 42% of the  crude produced will be supplied to Bashneft’s refineries in Ufa for  refining.

Bashneft-Polus, being the project operator, is currently continuing  with its exploration program to revise the geology and the hydrocarbon reserves  of the Trebs and Titov fields. Specifically, within the license block in  2011-2013, it re-activated 12, drilled and tested another 3 exploratory wells,  is currently drilling 2 more exploratory wells, and has completed 1,350 square  kilometers of 3D seismic surveys.

Bashneft-Polus is also preparing for commercial operation of the  Trebs and Titov fields. In May of 2013, it commenced development drilling on  three well pads at the Trebs and two well pads at the Titov, where a total of 16  producers are expected to be drilled.

The first commercial production at the Trebs and Titov fields is  scheduled for 2016. By 2020, the annual oil production under the project is  expected to reach a sustainable 4.8 million tons.

As of June 30, 2013, the overall investment in the Trebs and Titov  development project totaled RUB 20.4 billion (net of the one-off license payment  of RUB 18.5 billion). The total project cost is estimated at RUB 180  billion.

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