Tatarstan’s smaller oil companies given anti-crisis help

The targets set for Tatarstan’s smaller oil companies, stipulating recovery of 6.7 million tonnes of oil in 2009 and drilling 206 thousand metres in wells, remain unchanged, told a staff meeting the Nefteconsortium’s general director Fanis Valiev. The meeting was chaired by the advisor to the President of Tatarstan on oil, gas, energy and the environment Irina Larochkina.

In 2008, the targets were 6.477 million tonnes (a 5-percent increase versus 2007) and 428 thousand metres respectively. In 2008, despite a sharp decline in exploitation drilling in the 4th quarter due to the global financial crisis, the year’s exploitation drilling remained commensurate with the 2008 results.

In the 1st quarter of 2009, the smaller oil companies recovered 1.6 million tonnes of oil, which is 53 thousand tonnes more than in the same time in 2008. Tax payments to Tatarstan’s consolidated budget were 809 million roubles. 158 million roubles was allocated for a social mortgage lending programme.

Drilling, however, in the 1st quarter considerably reduced. A gain in oil inventories will therefore only be due to geological exploration and will at the end of 2009 total about 700 thousand tonnes versus 3.5 million in 2008.

According to Mr Valiev, the oil firms are facing a critical situation in terms of bank loans and returning credits. Banks refuse to issue new credits, prolonging contracts on earlier obtained loans has become difficult, too. Banks have doubled interest rates on earlier-issued loans. Smaller oil firms are forced to reduce to a minimum their investment programmes, switching to returning bank credits.

To eliminate the crisis’s after-effects, proposals have been submitted to the governments of Russia and Tatarstan on improving the existing tax mechanisms, to resolve issues preventing increase in oil recovery.

Nefteconsortium has asked the government of Tatarstan and the Tatneft oil producer to render financial aid in terms of maintenance supply, transportation and service for the smaller oil firms. According to F. Valiev, the decisions have been made to reduce the cost of service, provided by Tatneft for the smaller oil companies, and to cancel advance payment for this type of services. The smaller companies’s debt to Tatneft has been restructured. Some other measures of support have been adopted as well.