LONDON (Alliance News) - Volga Gas PLC Wednesday said operating subsidiary OOO Gaznefteservice has received regulatory approval for upgrade works on its Dobrinskoye Gas Processing Plant, a decision it thinks will lead to lower costs and higher revenues as it can ramp up production from its gas fields.
"We are delighted to have gained this approval, which will enable Volga Gas to significantly increase production by making full use of its current well production capacity," Volga Chief Executive Mikhail Ivanov said in a statement.
"Early in 2014, further development drilling on the VM field will commence. It is our intention, with this and further new wells, to increase production capacity and fully utilise the ultimate plant capacity," he said.
Volga has already built the main processing stream at the plant, and expects to get final approval to move to full production once it has installed "certain minor modules" as required by the Russian state construction agency.
It said it has already started increasing output on the Vostochny Makarovskoye and Dobrinskoye gas fields and expects to reach production rates of up to 500,000 cubic metres of gas and about 1,315 barrels per day of condensate by the end of the year, a total of over 4,200 barrels of oil equivalent per day.
"With increasing throughput, combined with the improvements we have achieved in the processing stream, we expect to see the unit costs of production for our gas and condensate fall substantially. These events are expected to lead to a period of strong growth in revenues and cash flow for Volga Gas," Ivanov said.
Volga Gas shares wre up 4.2% at 100 pence Wednesday morning.
By Steve McGrath; stevemcgrath@alliancenews.com; @SteveMcGrath1
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