MOSCOW, February 9 (RIA Novosti) - The board of directors of Russian natural gas giant Gazprom will meet this spring to consider the development strategy for its oil business, the company's deputy chairman said Thursday.
Alexander Ryazanov said Citigroup and McKinsey were working on the blueprint, which would form the foundation for the mid-term development program for the next three to five years as soon as it was approved by the board.
"This strategy will be considered by the Gazprom board of directors in April-May," Ryazanov said.
In September 2005, Gazprom bought 72.7% in the oil company Sibneft from its previous owner, tycoon and Chukotka Autonomous Area Governor Roman Abramovich, in a move to diversify the company's operations.
Ryazanov said the company remained undecided on whether to consolidate Sibneft into Gazprom.
"We will adopt the option that is best for Gazprom," he said, noting that he preferred independent development.
He said Sibneft would continue its oil production and develop both its own oil fields and those of Gazprom that the energy giant could not fully exploit due to its gas specialization.
"We will not stop at what we have achieved and will involve Gazprom's deposits in [oil] production," Ryazanov said.
According to the Sibneft president, Gazprom owns oil and gas deposits, but if priority is given to gas production, it would complicate oil production or even make it impossible. Therefore, he said, Sibneft should start developing the company's oil fields as soon as possible.
"We are ready for this," Ryazanov said.
He said Sibneft produced 2-2.5 billion cu m annually of what is mostly associated gas, and planned to pursue large-scale and costly prospecting in 2006 to include drilling at 405 wells.
Ryazanov said substantial investment would also be put into the Priobskoye Field in West Siberia, which is expected to yield 4.5 million metric tons (90,000 bbl/d) of oil in 2006 and reach 10-15 million (200-300,000 bbl/d) by 2010.
Sibneft also plans to increase refinement degree to 71.3% at the oil refinery in the West Siberian city of Omsk.