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Gazprom Neft Buys Orenburg Oilfields to Profit From Lower Costs

Oct. 31 (Bloomberg) -- OAO Gazprom Neft, the oil arm of Russia’s natural-gas exporter, acquired licenses to two oilfields in Orenburg to take advantage of lower development costs in the southern Russian region.

The transaction gives Gazprom Neft access to the Baleykinsky and Uranskaya fields, adjacent to its Tsarichanskoe development, the St. Petersburg-based company said today in an e-mailed statement, without disclosing terms. The two deposits may hold as much as 30 million metric tons of oil, it said.

“This region remains one of our key priorities,” First Deputy Chief Executive Officer Vadim Yakovlev said in the statement. “Last year Gazprom Neft acquired three assets in the Orenburg region and has been expanding its scale of operations since then.”

Gazprom Neft and Russian competitor TNK-BP have revived output in the area by linking small fields to existing infrastructure. Orenburg’s advantages over Siberia include well-developed infrastructure, reserve potential and lower development costs, according to Gazprom Neft’s statement.

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

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