Russian producer Novatek said Wednesday it increased 2015 liquids output by 51% year on year, and sees positive dynamics for 2016 after having reached full production at its first major crude field, Yarudeyskoye.
The production growth beat the company's mid-year forecast of a 40% boost to its liquids production in 2015, and came despite concerns at the start of the year that low global oil prices and Western sanctions would hamper Russian producers' operations and lead to declining output rates. Novatek produced 9.094 million mt, or 182,627 b/d, of liquids including crude and gas condensate last year, more than a third -- or 2.559 million mt -- coming in the fourth quarter, the company said.
Condensate from SeverEnergia, Novatek's joint venture with Gazprom Neft, has been the main source of the rising liquids output. The leap at the end of the year was likely also due to the launch of commercial production at the West Siberian Yarudeyskoye field on December 1.
Within six weeks the field hit its target crude output of 9,700 mt/d, or 71,100 b/d, the company said Tuesday.
The planned yearly output at the field, developed by Yargeo, a joint venture between Novatek (51%) and Nefte Petroleum Limited (49%), stands at 3.5 million mt, or about 70,300 b/d, Novatek said.
"The new volumes will positively impact the dynamics of our production in 2016 and will contribute substantially to our free cash flow generation," the company's CEO Leonid Mikhelson said in a separate statement.
Novatek expects record high flow rates and very low per unit development and lifting costs at the field on high quality reserve base and the use of state of the art drilling and completion technologies, Mikhelson has previously said.
The company plans to send crude from Yarudeyskoye via the 900,000 b/d Zapolyarnoye-Purpe line, which is to link fields in the northern part of West Siberia with Russia's trunk pipeline network, including the East Siberia-Pacific Ocean pipeline, at the end of 2016.
Novatek, Russia's second-largest gas producer after Gazprom and the country's seventh-largest crude producer, said it increased natural gas output by 9.3% on the year to 67.91 Bcm last year, beyond its earlier forecast of a 6% rise.
GAS CONDENSATE PROCESSING
Novatek's unstable gas condensate processing at its Purovsky plant jumped 82% year on year to 12.021 million mt, including 3.322 million mt in Q4, up nearly 60% on the year, it said.
The resulting stable gas condensate is transported by rail to Novatek's Ust-Luga fractionation and transshipment complex on the Russian Baltic Coast for further processing.
Novatek processed 6.727 million mt of stable gas condensate at Ust-Luga last year, up 43% year on year, including 1.681 million mt in Q4, up 14% on the year.
The Ust-Luga facility processes stable gas condensate and produces light and heavy naphtha, jet fuel, gasoil and fuel oil for additional exports.
The company's preliminary Q4 product sales volumes totaled about 1.657 million mt, including 1.017 million mt of naphtha, 229,000 mt of jet fuel, and 411,000 mt of fuel oil and gasoil.
With the Ust-Luga Complex achieving full capacity utilization last March, 2015 stable gas condensate exports reached 1.478 million mt, the company said.
As of December 31, Novatek had 1.29 Bcm of natural gas and 656,000 mt of stable gas condensate and petroleum products in storage or transit and recognized as inventory, it added.
