Alliance Oil starts up the Kolvinskoye oil field

Alliance Oil Company Ltd has completed infrastructure development and launched production at the Kolvinskoye oil field. The Company started to fill up a 146-kilometer pipeline from the Kolvinskoye oil field to the Kharyaga terminal where it joins the Transneft trunk pipeline via the existing Lukoil transportation facilities.

Oil preparation facilities and oil custody transfer unit with total tank capacity of about 75,000 cubic meters have been constructed. 5 heating stations, 2 relay pump stations and a number of supplemental units such as power stations, helicopter pads, and residential blocks have been completed. To date, 17 oil production wells have been drilled in the field and another 5 wells are under completion. By the end of the year 24 wells will be on stream.

The Company now proceeds to test infrastructure and flow oil from the completed wells into the pipeline in order to ramp up production.

The Kolvinskoye oil field is located in Timano-Pechora region. The field was discovered in 1986 and acquired by the Company in 2006. The Kolvinskoye license covers approximately 118 square kilometers. The productive formation is the Lower Devonian with wells drilled to a depth of approximately 4,100 meters.

Average initial oil rates are 1,200-1,500 bopd per well. Proved and probable reserves amounted to 239 mbbl as of December 31, 2010 and 3P (proved, probable and possible) reserves amounted to 519 mbbl. Notably, the production from the field is exempted from Mineral Extraction Tax through 2015. This year, the Company plans to drill an exploration well to test additional formations in the field.

“The Kolvinskoye oil field is our most significant upstream project. More than a thousand people took part in the final stage of construction works. The timely launch of the field within a period of less than three years proves the Company’s ability to manage very complex and integrated projects in a highly professional manner. The Kolvinskoye field is a significant driver to achieve our production target of 90,000 bopd going forward”, said Arsen Idrisov, Alliance Oil Company’s Managing Director.

For 2011, the Company’s upstream volume target is to produce in total 20 million barrels.

The Company will provide additional information about the progress at the Kolvinskoye field in the third quarter operational update on October 7, 2011.


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