Breaking News

CIT to Buy OneWest Bank for $3.4 Billion in Cash and Stock
Tweet TWEET

Gazprom Neft Said Likely to Pass on African Offshore Drilling

OAO Gazprom Neft, the oil arm of Russia’s natural gas exporter, may opt against drilling in two blocks off the West African coast after disappointing seismic studies, according to company officials.

The offshore blocks in Equatorial Guinea probably don’t contain commercial oil or gas reserves based on the research, two people at the St. Petersburg, Russia-based Gazprom Neft said, declining to be identified because of confidentiality.

Dropping the African project would be a set back for the company, which plans to almost double output to 100 million metric tons of oil and gas a year in 2020, or 2 million barrels a day, partly by expanding overseas. Gazprom Neft’s other international offshore exploration project lies off Cuba, next to where Spain’s Repsol YPF SA (REP) abandoned unsuccessful drilling.

Gazprom Neft, which agreed to explore and develop the blocks with Equatorial Guinea, is considering whether or not to go ahead with the opportunity, Chief Executive Officer Alexander Dyukov said yesterday at the company’s annual meeting.

Equatorial Guinea is a “high risk” opportunity, which might provide 11.8 million tons of output a year at peak, Gazprom Neft said in a presentation last year. Gazprom Neft and Equatorial Guinea’s Oil Ministry plan to decide on drilling “in the summer of 2012,” according to the company’s website.

Russian explorers have yet to repeat European companies’ success in the African offshore. OAO Lukoil, Russia’s largest non-state oil producer, has failed to find commercial reserves after drilling several wells off Ghana and the Ivory Coast.

Gazprom Neft is drilling in the Cuba offshore in a venture operated by Malaysia’s Petroliam Nasional Bhd., known as Petronas. The Russian company holds 30 percent of the venture.

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.