The pipeline to ESPO is completed in the record time!

In end of 2010 Irkutsk Oil Company has completed the construction of a 62 km pipeline connection from Yaraktinsky field to Transneft’s ESPO pipeline with the annual throughput capacity of 3.5 million tons. The total cost of the pipeline and deliver-acceptance facility construction exceeded 2 billion rubles. During the press-conference held on December 29, Mr. Nikolay Buynov, Chairman of INK, remarked that the construction schedule was tight:

• October, 2009, INK received specifications from Transneft for Tie-in point #7 of ESPO;
• January, 2010, the pipeline design was submitted for the state authorities review;
• The permit for construction was obtained in May and
• January, 2011, the Company was planning to tie-in to ESPO and to ship the first cargo of oil from Kozmino pumped via ESPO in February.

Next year, Irkutsk Oil Company will start the construction of a pipeline connection from Danilovsky field to Yaraktinsky field and transportation via the existing INK’s pipeline to the railroad terminal in Ust’-Kut will be suspended.

“Oil production was limited by the capacity of Yarakta-Markovo-Ust-Kut pipeline,” noted Mr. Nikolay Buynov. “As soon as we connect to ESPO, we will be able to increase oil production due to the larger pipeline capacity.”

According to the preliminary estimates INK’s production in 2010 totals 664 thousand tons of oil and gas condensate, which is 1.7 fold increase over the last year. In 2011, the company plans to produce some 1 million tons of oil and gas condensate.

Implementation of the plan to increase production will require considerable investments from the company. INK’s CapEx in 2011 is planned to 6.7 billion rubles, which is 40% above the 2010’s 4.8 billion rubles. Next year, INK will allocate more than 2.5 billion rubles for drilling production wells and over 1.8 billion rubles for construction of oil and gas field facilities. The company plans to drill 9 exploration wells, one test well, 14 production wells and 5 more wells will be spudded in 2011 and their drilling will continue in 2012. In 2010, the company drilled 3 test wells and 7 production wells.

In 2010, INK paid 2.9 billion rubles of taxes and customs duties and contributed 12 million rubles to Katangsky, Ust’-Kutsky and Kirensky districts, charity funds and non-governmental organizations within the frameworks of social partnership. In 2011, it is planned to contribute 21.5 million rubles for the same purposes.

During the press-conference INK also announced the results of a contest held among journalists for the fifth time in row since 2006. Good newsbreak, high level of trust between the company and media and fair work of journalists allows covering the company’s activity free in regional newspapers and even federal TV channels.