Urals Energy Plc Regulatory News (UEN)

14 Nov 2006 07:04

Urals Energy Public Company Limited14 November 2006 Urals Energy Public Company Limited Transneft Approval for Access to ESPO Pipeline Urals Energy Public Company Limited (LSE: UEN), the international oil and gasexploration and production company which was admitted to the AlternativeInvestment Market of the London Stock Exchange in August 2005 today announcesthe approval by OAO AK Transneft ("Transneft") for Urals Energy's Dulisma fieldto be connected to the East Siberian Pacific Ocean ("ESPO") pipeline and certainchanges in its proposed development plan for the field. Key points: • Approval by Transneft for Dulisma field to be connected to the East Siberian Pacific Ocean pipeline gives Urals Energy permanent export pipeline access for crude oil production. • Connection to the pipeline provides access to the high volume energy consumers of the Pacific Rim, specifically China. • Tie in reduces distance of pipeline interconnect from the Dulisma field by 290 kilometres giving estimated capital expenditure savings of $70 million. • Development already underway at Dulisma with equipment and facilities being readied for transport this winter and procurement of pipe and other facilities for interconnect to begin April 2007 • Dulisma Field expected to produce at a rate of approximately 12,000 BOPD by end 2008, ahead of pipeline completion, rising to 30,000 BOPD by 2011. William R. Thomas, Chief Executive Officer, commented: "The approval by Transneft for access by Dulisma to the ESPO pipeline is animportant milestone in the successful development of the Dulisma field. UralsEnergy appreciates the quick response to our application by Transneft and looksforward to working closely with Transneft during the construction of the ESPOpipeline and the development of the Dulisma field. This is a key developmentfor Urals Energy giving the Group an estimated $70m of cost savings and apermanent export pipeline two years earlier than originally anticipated. " 14 November 2006 Enquiries:Pelham PRJames Henderson 020 7743 6673Gavin Davis 020 7743 6677 Urals Energy is pleased to announce that it has received approval by Transneftto accept the oil produced by Urals Energy's Dulisma field at Pump Station #8located near the town of Kirensk and approximately 80 kilometers from theDulisma field, for its ESPO pipeline. This approval by Transneft provides theDulisma field future permanent export pipeline access for its crude oilproduction and reduces the distance of constructing a permanent pipeline fromthe Dulisma field by approximately 270 kilometers. Approval by Transneft allowsUrals Energy to optimize its development plan and forego further construction ofa temporary pipeline to Ust-Kut. The Group will now concentrate on constructinga permanent connection with the ESPO pipeline. Urals Energy will begin projectdesign shortly for its Dulisma-ESPO inter-connect, commencing procurement ofpipe and other facilities by April 2007. Based on Urals Energy's original fielddevelopment plan, the reduced distance is estimated to result in plannedpipeline construction cost savings of approximately $70 million. The Dulisma field is located in the Irkutsk Oblast, 350 kilometers northeast ofthe town of Ust-Kut. Earlier this year, Transneft announced an important changein the route of the ESPO pipeline away from Lake Baikal and further to thenortheast where several important oilfields await development, includingDulisma. According to Transneft, construction of the ESPO began in April 2006and first phase completion from Taishet to Skovorodino is planned by the end of2008. The Dulisma field will be one of the early entrants to the ESPO as developmentis starting in 2007 and first oil is expected to enter the pipeline in mid-2008.By late 2011, the Dulisma field is forecast to produce approximately 30,000BOPD. Interim field production prior to connecting Dulisma to the ESPO willcontinue to be transported to Ust-Kut via a temporary pipeline operated by anadjoining producer. Urals Energy acquired the Dulisma field in June 2006 for $148 million cash.Dulisma has proven and probable oil reserves of 109 million barrels and possiblereserves of 1.7 trillion cubic feet of gas and 87 million barrels of oil andcondensate. The Dulisma field will be developed using horizontal drillingtechnology and the first development well is expected to spud in the spring of2007. To drill these wells, Urals Energy has purchased a new-built, 160 ton,heavy duty mobile drilling rig and associated equipment for use by Dulisma. Asannounced earlier, development plans are already underway at Dulisma withimportant equipment and facilities currently being procured and readied fortransport to the field site this winter. NOTES FOR EDITORS According to Transneft, in April 2006, construction of the ESPO pipeline beganfrom Taishet towards Ust-Kut in a west-to-east direction. In October,construction began at Tinda near the planned Skovorodino station that willconnect with China. The first operational segment of the ESPO pipeline isexpected to connect the Talakan field at Pump Station #10 with Pump Station #1at Taishet. Transneft has announced that when the Taishet to Talakan segment iscompleted, it may reverse the flow of oil, east to west, as a means of earlyproduction. Timing of this "early-oil" transportation plan has not beenannounced, but Transneft has indicated that the route from Taishet toSkovorodino will be completed in late 2008. The 160-ton drilling rig purchased for Dulisma was manufactured in China incompliance with API specifications and recently passed load-testing andinspection by Urals Energy and its contractor to supply a custom-made top-driveunit, Canrig Drilling Technology Limited. In addition, Urals Energy hascontracted with various Russian manufacturers to provide a two 2.5 MWgas-electric turbine generator, a first stage central oil-processing facility,oil storage tanks, a 100-man work camp, power lines and transformers, in-fieldpipelines and pumps, and construction equipment and transport vehicles. This information is provided by RNS The company news service from the London Stock Exchange