Petrom, the biggest Romanian company, believes that in about six years it may start production in the largest block it owns in the Black Sea, Neptun, where it carries out exploration operations with ExxonMobil US giant.
The cost of the development of the block can amount to hundreds of millions of euros, considering the cost for an offshore exploration well in deep water might amount to around 80-100 million euros.
"The deep water exploration works in the Black Sea, Neptun block, will be funded together with Exxon. It is good business for Petrom and implicitly for the Romanian State, which still holds 49% of the shares. After the finalisation of the seismic, exploration wells will be drilled as considered appropriate. The cost for an offshore exploration well in deep water might rise to around EUR 80-100 million euros," says Johann Pleininger, member of the Executive Board of Petrom, responsible for Exploration and Production.
Besides Neptun, the company owns another block, Istria, wherefrom Petrom extracts hydrocarbons accounting for 16% in onshore production. Overall, the two Black Sea blocks have an area of 13,880 square metres.
"(...)In total we are talking about 4-6 years until production phase starts," says Petrom representative.
According to some previous statements by Petrom officials, offshore exploration can be in some cases around 70 times more expensive than the onshore one. Still, the company believes the Black Sea holds huge resources, meaning that despite the very high costs the project is economically viable if successful.
Works to find new deposits are highly risky, with success rates for these projects standing at only 10-15%. "(...)In the third quarter of the year we will start the seismic works. We expect first results in the second half of 2010," Petrom representative also says.
Petrom has recently started production on a new field in Kazakhstan, Komsomolskoe, with reserves of around 34 million barrels, of which almost two thirds will not be extracted as a result of the high costs or lack of technology. "This production will lead to an increase of 10% of the total Petrom's oil production".
The company says it seeks every opportunity of expanding on markets in the Caspian region and in Kazakhstan Petrom has already had some talks with KazMunaiGaz, owner of Rompetrol group, with a view to an alliance.
Petrom in the first quarter posted net income worth 506m RON (118.5m euros), down 48% from the same period of last year.
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