Oilmen are tightening their "tails" - Newspaper Kommersant No. 172 (7373) of 09/19/2022

Oilmen are tightening their "tails" - Newspaper Kommersant No. 172 (7373) of 09/19/2022



Rosneft continues to consider proposals to optimize the portfolio of its "tail" assets. According to Kommersant, the oil company may sell another asset with declining production in southern Russia - RN-Krasnodarneftegaz. Last year, Rosneft already sold three similar assets in the region to the private company Tsentrgeko, which looks like a logical contender for RN-Krasnodarneftegaz as well. According to experts, RN-Krasnodarneftegaz, with an annual production of about 0.5 million tons, is hardly worth more than $100 million, and against the backdrop of sanctions restrictions, the amount may turn out to be much less.

Rosneft is discussing the sale of its subsidiary LLC RN-Krasnodarneftegaz as part of the optimization of tail assets, sources in the industry told Kommersant. RN-Krasnodarneftegaz owns 30 licensed areas, where it produces about 500 thousand tons of oil per year. The company was founded in the 1940s, its cumulative production is more than 230 million tons of oil. The depletion of the plots is 94%. The proven oil reserves of RN-Krasnodarneftegaz fields amount to 51 million tons.

Rosneft has already optimized its portfolio of mature assets in southern Russia last year. Last year the company sold RN-Ingushneft, Rosneft-Dagneft and Dagneftegaz to Tsentrgeko Holding (shareholders Dmitry Kamyshev, Tatyana Morozova). The total production of these assets was estimated at 1 million tons per year. According to a Kommersant source in the industry, the sale of RN-Krasnodarneftegaz was discussed with Tsentrgeko. Rosneft and Centrgeco declined to comment.

While major oil companies focus primarily on large projects, it is standard practice to sell off mature assets to smaller players that could improve project economics by reducing costs. “The sale of tailing assets with a significant degree of depletion, water cut and a relatively high carbon footprint allowed us to fully concentrate on the implementation of large-scale projects,” Rosneft quoted Igor Sechin, the head of the oil company, in February.

In 2021, Rosneft sold the assets it called "tailing" for a total of approximately 17 million tons of annual production. Most of them were acquired by the NCC of the ex-head of Rosneft, Eduard Khudainatov: these are Varyoganneftegaz, RN-Severnaya Neft, Sakhalinmorneftegaz, part of the sites of Samaraneftegaz, Orenburgneft and Nyaganneftegaz.

Among large oil companies, Gazprom Neft also resorted to the practice of selling “tail” assets, which sold the Zapadno-Noyabrsky and Yuzhno-Noyabrsky blocks a few years ago (see “Kommersant” dated June 9, 2021).

According to Karen Dashyan of Advance Capital, the strategy of major oil majors is to effectively manage a portfolio of projects, in which fields with declining production and high water cut are sold on the market to medium-sized private companies. Thus, large oil companies focus on large and promising projects.

Prior to the sanctions, RN-Krasnodarneftegaz could have been valued at around $100 million, but due to uncertainties associated with international restrictions, it could be worth much less, says independent expert Dmitry Kasatkin. In his opinion, a private player could more effectively develop this asset.

Dmitry Kozlov



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