OREANDA-NEWS. October 22, 2009. TNK-BP Holding announced that it intends to put the giant Russkoye field on stream in 2011. It contains 3bn barrels of recoverable reserves (under Russian classification) of high viscosity oil. Commercial production at the field could begin by 2014. According to the company, the Russkoye field could reach an annual output of 7.5-10m tons (151,000-200,000 bpd) in 2012-2020, reported the press-centre of OTKRITIE FC.

View: The oil field is located on the Yamal peninsula, one of the youngest oil-bearing Russia’s regions. Since there are neither production facilities nor roads and local pipelines, we regard the timing of the field’s commissioning (2011) as reasonable. However, we do not rule out that TNK-BP Holding could put the field into operation earlier, if Transneft purchases the local pipeline Vankor-Purpe from Rosneft and increases the pipeline’s capacity. In addition, the commissioning of Russkoye could become a precedent for strategic oil fields being developed by a privately-owned company (one of the owners is British Petroleum). For the record, the governmental resolution about strategic hydrocarbon fields gives priority in the development of such fields to state-owned corporations.

Valuation: TNK-BP Holding’s common stocks trade on P/E at a 20% discount to the rest of the energy sector.

Action: We view this news as a positive for TNK-BP Holding’s stocks since it reflects not only operating activity of the company, but also the friendly attitude of the government to privately-owned oil corporations, including international ones.