Senior Vice President for international projects,TNK-BP
What is TNK-BP’s position on the world’s energy map?
TNK-BP is the third largest oil and gas company in Russia and among the 10 largest private oil companies in the world, producing approximately 2,000 million boed of oil and gas last year. To give you some context, that’s slightly higher than annual oil production of the whole country of Qatar.*
We are also deep in reserves – a major key performance index for our industry. TNK-BP’s total proved SEC LOF (Securities and Exchange Commission’s Life of Field) reserves amounted to 9.115 billion boe as of December 31, 2011. With a proved reserves increase of 0.972 billion barrels, the replacement ratio for total proved SEC LOF reserves in 2011 amounted to 145 per cent.
The majority of our projects are in Russia, but we envision an increasingly share of production to come from international projects.
Please give us an overview of TNK-BP’s activities and ongoing projects outside of Russia?
International expansion plays a key role in TNK-BP’s growth strategy. We have prioritised regions that share similarities in political and business points of view with Russia, and focused on emerging markets with high growth potential.
In Vietnam, TNK-BP has acquired from BP a 35 per cent stake in an upstream offshore gas production block containing the Lan Tay and Lan Do gas condensate fields, a 32.7 per cent stake in the Nam Con Son Pipeline and Terminal and a 33.3 per cent stake in the Phu My 3 power plant, which is waiting for the lender and government’s approval.
In Venezuela, we have acquired from BP a 17 per cent stake in Petromonagas, a 40 per cent stake in Petroperija SA and a 26.7 per cent stake in Boqueron SA.
TNK-BP is one of the largest Russian investors in Brazil. We purchased from HRT a 45 per cent stake in Brazil’s Solimoes Basin Project where 21 oil and gas exploration blocks are located. We have already drilled seven exploratory wells there and the success rate was 80 per cent.
Vietnam was among the first international assets that TNK-BP acquired. Why Vietnam?
For us, Block 06.1 offshore Ba Ria-Vung Tau province is a high-quality asset that will enable TNK-BP to develop new expertise, particularly in offshore operations. We believe Vietnam as a rapidly developing country with significant gross domestic product growth and population growth is an attractive place to do business. We also see great potential in the Asia-Pacific region and believe that Vietnam could be an anchored asset for our future growth in the region.
Furthermore, Vietnam and Russia have a strong and close relationship. Many Vietnamese who are now working in government agencies, ministries and businesses studied in the former Soviet Union. I’ve met people from PetroVietnam who graduated from the same oil and gas university in Moscow as I did. When we talk, we always speak in Russian.
How does the local energy industry benefit from the presence of TNK-BP in Vietnam?
We would like to work with Vietnam to meet its energy needs by developing its energy resources. We want Vietnam to see us as a reliable partner of choice. In the long term, we will continue to actively look for opportunities to expand our business here.
Lan Tay platform, built and operated in Block 06.1, is delivering sterling results
I’d like to add to what Boris has shared with you. The presence of TNK-BP as a very large oil and gas company in Vietnam, looking at growth prospects within the country, is a good sign for foreign investment environment. We hope we can work with the Vietnamese government, with PetroVietnam and with the local communities to create mutual success.
What is your business development plan for Vietnam?
General Director, TNK-BP
We recognise the enormous responsibility to both Vietnam and TNK-BP to operate our assets safely, reliably and efficiently. Achieving these targets supports delivery of stable gas supply to the country’s energy market.
This year, we celebrate 10 years of operating Block 06.1 without an employee ‘Day Away from Work’ incident. This is an extraordinary achievement as measured by industry standards.
Similarly, our facilities all run at 95 per cent availability throughout the year, and we have achieved 95 to 98 per cent operational efficiency.
We are looking for opportunities to grow both in our existing licensed area and in M&A activities. As you would know, we have participated in PetroVietnam’s 2011 bidding round for offshore blocks in Vietnam continental shelf.
What are the competitive advantages of TNK-BP against other international oil and gas companies operating in Vietnam?
I’d like to talk about what we see as our strengths, not in the context of a competition. We have enormous sub-surface expertise and experience within TNK-BP group. TNK-BP is a young yet vibrant company, having the financial resource and the ambition to accommodate a vigorous growth strategy. We continuously review international opportunities that offer synergies with the group’s existing businesses. We have proven track records of safety and reliability in all our operations. I believe we are a partner which has both the capacity and integrity to deliver up to the highest standards.
Human resources are crucial in the success of any project. What is your assessment of the local workforce and what do you do to develop your staff?
We take great pride in our team. Our staff members are 98 per cent Vietnamese nationals, our offshore organisation has 100 per cent Vietnamese nationals. We continue to nurture our people, training and building up their skills and capabilities to meet international standards.
We have developed a high-calibre team of technical experts in offshore operation and maintenance and are ready for any offshore projects that TNK-BP may acquire in the future.
Additionally, we have sent our local staff to learn about TNK-BP Group, and vice versa, people from the group have joined our local team, our chief financial officer and our subsurface base manager are from Russia.
What have you done as a new investor in Vietnam?
As shared earlier, sustaining the safe and reliable operation of the asset is the backbone of our presence. We are fully aware of our responsibility in operating an asset like Block 06.1 that is so vital to the energy security of Vietnam – more than 34 billion cubic metres of gas have so far fuelled over a quarter of Vietnam’s electricity generation. This year alone, our planned production is 4.6 billion cubic metres of gas.
Beyond operations, we are making progress with our Lan Do field development. In April, we successfully completed drilling and testing two production wells in Lan Do gas and condensate field in Block 06.1. Work is underway to lay pipe and connect the wells with the existing Lan Tay platform so we can start production from Lan Do field in the fourth quarter this year.
TNK-BP is known for a lot of social investment projects in Russia. What is the company’s strategy in Vietnam?
TNK Vietnam’s corporate social responsibility lies within TNK-BP’s philosophy – our success is measured not only in satisfying the need for energy, it also requires improving the well-being of our stakeholders. It’s equally important with bringing in the capital and capability that we understand the needs of the environment where we operate. Accordingly, we work with local communities, local stakeholders, NGOs to understand needs.
Last year we made a donation of $200,000 for an ambulance and technical training for Le Loi general hospital in Ba Ria-Vung Tau province. This year, we will grant scholarships for talented students with financial difficulties, finance scientific research among students in mining and geology, provide humanitarian heart surgeries for children who otherwise cannot afford it and provide road safety training and protective helmets for primary school children.
We try to engage our staff in activities we do, whether it is a fund-raising run, a cyclo race, a charity auction, or direct help to those in need – so everyone has better sense of sharing with the less fortunate.
(*) Qatar produced 1,723 mboed in 2011 (source: BP Statistical Review)