The company's press service says that the Kalmykia project intends the participation of Ukraine's Neftegaz in developing five land blocks (promising Caspian shelf zones) and 17 operating fields owned by OAO Kalmneft and ZAO Kalmpetrol, as well as in auction tenders for the fields Titova and Trebsa in the Nenets Autonomous District (Barents sea coast, north of European Russia).
"As the first step in the project, the Company's board decided to buy 50 percent shares of ZAO Kalmoil", the communique reads. In the course of talks, the cost of the 50-percent block of shares reduced from 32.5 to 10.9 million dollars.
The total reserves of oil in the Kalmoil license zones constitute 135.3 million tonnes.
The total of capital investments in geological survey and the development of the infrastructure is expected to reach 162.7 million dollars. Upon expiry of the seven-year term - when investments are recouped - profits from the project will be divided 80/20 between the Ukrainian and Russian parties; upon full return of investments it will be 50/50.
The Ukrainian company plans to begin the production and sale of oil in 2006. By 2008 the level of oil production is expected to reach 362,000 tonnes. "From that time on, the Company's current investments will pay their way", the communique notes.
The press service of Ukraine's Neftegaz said that realization of the project would increase Ukraine's fuels supply and make its less dependent on energy imports.
