Kharyaga oil cools Nenets economy

The tax revenues of the Nenets Autonomous Okrug are reduced with almost one billion ruble (€16 million) following the drop in production at the Kharyaga field, Nenets Deputy Governor Vladimir Blank says in a press release.

That is equal to about five percent of the total regional revenues. According to the regional government website, the Nenets Autonomous Okrug in 2015 have incomes of 15.48 billion rubles (€255 milllion).

The drop in revenues from the Kharyaga field comes in addition to a generally difficult economic situation. Governor Igor Koshin has from before announced a 10 percent budget cut following economic hardships.

The drop in Nenets budget revenues comes as the regionally-owned Nenets Oil Company, holder of 10 percent of the Kharyaga shares, in 2014 got its project revenues slashed by more than 60 percent.

According to newspaper Vedomosti, oil production at Kharyaga in 2014 fell five percent to a total of 1,5 million tons. At the same time, investments and operational costs increased significantly.

The project is operated on the basis of a Production Sharing Agreement.

As previously reported, project operator Total has reduced its annual peak production estimates for the field from 3,5 million tons to 1,9 million. That, in addition to the growing investments and operational costs, has angered Russian authorities, which now consider to kick out Total from the operator’s chair and instead install state-owned Zarubezhneft.

The Kharyaga project is operated by Total (40%) together with Statoil (30%), Zarubezhneft (20%) and Nenets Oil Company (10%).