DIVERSIFYING THE BUSINESS

All over the world oil producers strive to evolve into integrated energy companies, which is seen by many as a way of achieving higher efficiency.

By entering the gas energy sector Surgutneftegas, which annually produces over 14 bcm of gas, or 32% of the gas the Russian oil companies produce, takes one more step onto its way to transform into an energy company.

The Company’s plan is to cut third-party electricity supplies by 25% by the year 2007 through constructing own power stations.

As of today the Company operates seven gas turbine electric stations which cover up to 20% of its overall electricity requirements.

The year 2005 has seen the start of stage II of the Company’s large scale project to produce energy internally. We have started constructing six more gas turbine electric stations which are located at the Yukyavinskoe, Konitlorskoe, Muryaunskoe, Zapadno-Kamynskoe, Severo-Labatyuganskoe and Tromyeganskoe fields.

The Company has initiated construction of two gas piston power plants at the Vostochno-Yelovoe and Talakanskoe fields.

In the long term (in 2007-2012) the Company plans to construct four more gas turbine electric stations.

“Analyzing the first stage of the project we can see its high economic and ecologic efficiency,” Chief Engineer, First Deputy Director General Nikolay Matveev says. “First, we reduce pollutant emissions and achieve higher ratio of utilization of associated petroleum gas; second, we do not have to construct gas pipelines, compressor stations, high tension lines and electric power substations and, thus, we save money; third, we get cheaper electricity and reduce our expenses. Besides, we found that when we utilize associated petroleum gas through producing electricity at gas turbine stations at new and remote fields, not only do we get higher economic and ecologic efficiency but we also develop production and facilitate commissioning of the new fields”.

Press Service of OJSC “Surgutneftegas”