OREANDA-NEWS. August 05, 2010. Russia's Natural Resources Ministry has evaluated the Trebs and Titov fields, which will be auctioned off in one lot at RUB17bn (USD567.23m). According to Minister Trutnev, the figure was calculated using the established formula for the initial payment, reported the press-centre of OTKRITIE Financial Corporation.

The C1 category reserves at the Trebs deposit are estimated at 78.9m tonnes of oil, while those of the Titov field amount to 63.4m tonnes. The Russian government will hold a tender for the oil deposits in 4Q10. In the past, Rosneft, LUKOIL, Gazprom Neft, Bashneft and Zarubezhneft have shown interest in obtaining licenses for the deposits. Also, during a Rosneft conference call yesterday, VP Peter O'Brien said that the company wants to independently develop these deposits.

View: We believe this is good news for auction participants since the Energy Ministry was previously looking to put these oil fields on auction at USD2bn (as the optimal one-off payment). Though a state-owned company is likely to win out, we anticipate stiff competition for the tender due to the high quality of these assets. Indeed, these oil fields have the potential of becoming a second Vankor after detailed exploration and possible zero export taxation. Based on the price announced, one barrel of reserves is valued at USD0.54 – the current market price for the prospective assets. The eventual price will depend on the level of competition. In recent auctions, one barrel has been valued at USD0.30-USD0.70.