Novatek announced that its joint venture Arcticgas has secured a bid for a geological survey, exploration and production license for the Osenniy subsoil area.
The Osenniy subsoil area, which is located in the Yamal-Nenets Autonomous Region (YNAO), is estimated to hold hydrocarbon resources of 4,411 million barrels of oil equivalent, according to the Russian resource classification.
Novatek management board chairman Leonid V. Mihkelson said: “The acquisition of the Osenniy license area supports our recently announced long-term strategy of increasing our natural gas and gas condensate production within reach of the Unified Gas Supply System as well as our goal of increasing our exploration activities.”
The license has been obtained for a term of 25 years for the area.
Novatek said that the auction resulted in a one-time payment for the subsoil use in the amount of RUB 1.4bn ($2, 39,400).
Mihkelson said: “The new license area is part of our strategy to drill deeper into the liquids-rich formations to ensure we fully load our processing facilities to maximize risk-adjusted margins for many years to come.”
Bordering Arcticgas’ Samburgskiy license area, the Osenniy license area is expected to expand Novatek’s hydrocarbon resource base in the Nadym-Pur-Taz region of YNAO.
The new license is expected to add the company’s long-term projects to increase deeper-layer hydrocarbon production.
Recently, the Russian gas producer and its partners have commenced LNG production from the $27bn Yamal liquefaction plant.
Planned to be built in three phases, the Yamal LNG plant is expected to produce 16.5MTPA of LNG and up to 1.2MTPA of gas condensate.
Novatek’s upstream activities are mainly located in the prolific Yamal-Nenets Autonomous Region.
The region is considered as the world’s largest natural gas producing area and accounts for approximately 80% of Russia’s natural gas production.