Yuriy Rubin on oil drilling | Irkutsk Oil Company | Video
World Finance interviews Yuriy Rubin, Chief Financial Officer of Irkutsk Oil Company, on the company's east Siberia drilling and highly productive Yaraktinsky field
Irkutsk Oil Company has enjoyed great success recently, with a growth rate of 65 percent for the last five years, and 2.3m tonnes of liquids produced in 2012, double that of the previous year. Chief Financial Officer Yuriy Rubin outlines some of the key details of its expansion, with the acquisition of licenses in east Siberia and new plans for the highly productive Yaraktinsky field, and how this has gone hand-in-hand with a commitment to increasing efficiency and reducing waste.
World Finance: Tell us more about this expansion: what have you achieved?
Yuriy Rubin: Irkutsk Oil Company is 12 years old as of last November, and we have achieved significant growth. For instance in 2001 we produced just 30,000 tonnes of oil. Today we need just three or four days to achieve this amount of production.
As of last year we produced 2.3m tonnes of liquids, and almost doubled our production of the previous year.
Currently we utilise approximately 13 rigs, and maybe even five years ago we had just three rigs: a significant increase. That allows us to expand geographically, we recently acquired fuel licences in the northern part of east Siberia, in Yarakta, and currently we have 21 licence areas, covering total territory similar to Belgium or Netherlands: about 40,000 sq km.
World Finance: You’re also using more efficient extraction methods, tell us more about that.
Yuriy Rubin: We gained a lot of experience in east Siberia, through significant operations. Irkutsk company was the first company ever to start commercial drilling in east Siberia. And we gained significant experience, and most of that came through selecting the right drilling bits for different horizons, for different layers: we selected the best optimal method.
And we signifcantly increased the speed of drilling. In 2005, we drilled a speed of about 2-3 metres per hour, and currently it’s 5-7 metres per hour. Almost a two-fold increase.
Second, we start introducing different advanced techniques. For instance, horizontal drilling, fracturing, and geosteering.
Irkutsk Oil Company was very happy to meet the EBRD’s very strict environmental standards, and that really helped to grow the company
World Finance: And you’re working with the European Bank for Reconstruction and Development to reduce waste through flaring gas: tell us more about that.
Yuriy Rubin: Our partnership with EBRD started in 2008, when the European Bank for Reconstruction and Development became a shareholder of Irkutsk Oil Company. They were directed with our desire to diminish greenhouse effect through re-injection of EPG. And that was a very good match, because our company required funds for this programme, and EBRD saw that their real action would reduce EPG. Since that time we built some gas-gathering pipelines, and tested reinjection of gas, and hopefully within the next year or two we can attain a 90-95 percent reduction in EPG flaring.
We would like to thank EBRD for all their continued support; it’s not only financial support, we have a lot of input from the EBRD, we’re also really happy that they back us up us in many of our works. Also, Irkutsk Oil Company was very happy to meet the EBRD’s very strict environmental standards, and that really helped to grow the company and go to the next level, I would say.
World Finance: You spoke recently about your plans for the Yaraktinsky field, how far have they come, and what’s next?
Yuriy Rubin: The Yaraktinsky field is responsible for about 90 percent of the current company’s production, so we were very lucky. That field is very good producer, and most of the wells have a good production rate. Also, like I mentioned before, the Yaraktinsky field allows us to test our gas injection, and see how this area accepts this gas, and what happens in the formation. We do plan to continue our drilling programme at the Yaraktinsky field, because we see this field as having high potential. It keeps surprising us, and we believe that within the next 5-6 years we can reach 3m tonnes total for the Yaraktinsky field.
World Finance: So finally is this double-digit growth sustainable, and what’s your five year plan?
Yuriy Rubin: As I mentioned, Irkutsk Oil Company has grown at a rate of about 65 percent for the last five years. Of course, we were in the very beginning of the so-called S-curve, which as you know is impossible to attain for a long period of time. We really hope for the next 5-6 years we could still keep a growth rate of approximately 10-20 percent, and that would still require significant investments from the company.
We plan to invest about $1.5bn for the next 5-6 years, and most of that would be invested in our development programme, but a portion of that would be invested in exploration. So, we believe that exploration will be successful, and we could still surprise our shareholders and our partners with our continued growth for many years to come
World Finance: Yuriy, thank you.
Yuriy Rubin: Thank you so much.