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The head of Rosneft upped Thursday the production growth forecast for 2006 by 1 percentage point to 8%
The head of Rosneft [RTS: ROSN], Russia's largest state-controlled oil company, upped Thursday the production growth forecast for 2006 by 1 percentage point to 8%. Speaking at an investment forum in China on the sidelines of the Russian prime minister's visit to the country, Sergei Bogdanchikov said: "It [output] will most likely grow by 8%, close to 8%." Rosneft earlier said it raised production of oil with gas condensate by 8.4% in January-September 2006 against the same period last year, to 59.4 million metric tons (436.59 million bbl), or 0.4% above plan. Bogdanchikov said an increase in average daily well output from 13.9 metric tons (102 bbl) to 15 metric tons (110 bbl) has encouraged the growth. He added that some new wells have yielded from 76.6 tons (563 bbl) to 105.4 tons (775 bbl) this year. He said Rosneft's net profit will be no less than what was forecast during the road-show ahead of the IPO in Moscow and London this summer, when the company reportedly raised $10.4 billion. The company's net profit in the first half of 2006 was above 60 billion rubles ($2.25 billion), up nearly 2.5-fold on the same period last year. The growth was mainly due to growing world oil prices, the rise in production, domestic and foreign sales and refining. Supplies to China Bogdanchikov also reaffirmed plans to ensure supplies to China via the first pipeline of the multibillion-dollar East Siberia-Pacific Ocean pipeline from the Vankor deposit in East Siberia, which has reserves estimated at over 400 million metric tons (2.94 billion bbl). "The first pipeline of the East Siberia-Pacific Ocean project could pump crude from this field alone," he said. "There is a strong guarantee that there will be enough oil for the first pipeline." The Rosneft president said production at Vankor will begin in 2008. A senior Rosneft official said earlier Thursday that the first phase of construction under the project will be completed in the second half of 2008, but the pipeline will come online not earlier than 2009. The launch was earlier planned for 2008. This year, Russia will supply 13 million metric tons (95.55 million bbl) of oil and derivatives and will increase supplies in 2007, although not drastically, the Rosneft president said without elaborating. REBCO futures He also said Rosneft plans to start selling oil via futures contracts for Russian Export Blend Crude Oil (REBCO) next year. "We plan such contracts next year," he said, adding it could take the company several months to finalize the decision. REBCO futures for oil from Russia's Primorsk on the Baltic Sea, which operates year-round, have been traded on NYMEX since October 20. The new REBCO blend, the third crude brand to trade on the NYMEX after WTI and Brent, will replace Urals as Russia's price index used for calculating supply prices, export duties and mineral extraction tax. It is expected to fetch a higher price than Urals - generally priced at a $5-6 per barrel discount to Brent - due to its the lower sulfur content. Bogdanchikov hailed the introduction of the new oil blend and urged further coordination between the government, oil companies, consumers and traders. "It is a good idea, but it requires further work. The idea is to determine a more accurate price for Russian oil." REBCO futures fetched $55.25 per barrel for delivery in January 2007, and $58.95 per barrel for delivery in June 2007, the NYMEX said in late October.
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