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OAO NOVATEK, originally OAO FIK Novafininvest, was established as an open joint stock company in August 1994 to provide a central legal entity for the management of construction activities, exploration and production in the Russian oil and gas industry.
The first operating business of the group, SNP Nova, was acquired in January 1995. SNP Nova was one of the largest state owned enterprises specializing in oil and gas pipeline construction in Russia, originally founded in 1979. Currently, SNP Nova continues to construct pipelines, transportation infrastructure and production facilities in various locations throughout the country, including the Far North region.
Following the acquisition of the controlling interest in SNP Nova, the Company intensified its expansion in the oil and gas industry. It secured interests in several production companies which held exploration and production licenses in Yamalo-Nenets District of Western Siberia (YANAO) - a region which provides over 90% of total Russian gas production and approximately 20% of the world’s natural gas production.
Amongst the most important initial acquisitions were Purneftegasgeologiya, Tarkosaleneftegas, Khancheyneftegas and Yurkharovneftegas. Gaining a controlling stake in these entities has been of a particular importance as they held exploration rights for oil and gas fields in the early stages of development. The successful development of these fields has enabled NOVATEK to become the leading independent Russian gas producers in terms of production volumes and hydrocarbon reserves.
NOVATEK has been actively selling natural gas directly to the end users since December 2002. The Company’s customers’ network comprises energy companies throughout Russia, including such regions as Moscow, Yaroslavl, Samara, Tyumen, Chelyabinsk, Perm, Kirov and the Chuvashia and Komi Republics. The main consumers of the Company's natural gas are power generation plants, metallurgical plants, and wholesale gas suppliers, amongst others.
To better reflect the nature of its core operations in the natural gas business, the Company adopted its new name OAO NOVATEK in 2003 and initiated a restructuring program to fully consolidate core assets and divest non-core assets. By December 2004, the Company had successfully completed the full consolidation of Tarkosaleneftegas and Khancheyneftegas and sold its interest in non-core business activities involved in oil and gas construction services, including SNP Nova, and telecommunications. NOVATEK continued its restructuring program in 2005 by disposing its interests in banking and oil production assets.
In June 2005, NOVATEK commenced operations at its wholly-owned PurovskyGas Condensate Stabilization Plant (Purovsky Plant). The Purovsky Plant was an important step in the evolution of the Company’s liquids production activities giving NOVATEK full control over its processing needs and allowing it to export 100% of its stable gas condensate through the Vitino Port facilities on the White Sea.
In July 2005, NOVATEK successfully placed 19% of its shares on London and Russian exchanges representing one of the largest Russian IPO’s ever.
In 2008, NOVATEK launched the second phase of development at the Yurkharovskoye field, thereby increasing the Company’s productive capacity to over 100 million cubic meters per day. In addition, the Company also completed the second phase at its Purovsky Plant increasing the plant’s processing capacity to five million tons per annum.
In 2009 the Board of Directors of OAO NOVATEK approved the acquisition of a 51% equity stake in OAO Yamal LNG holding the license for exploration and development of the South-Tambeyskoye field. The South-Tambeyskoye field was initially discovered in 1974, the field is located in the north-east of the Yamal Peninsula. As of 1 January 2008, the field’s natural gas reserves in accordance with the Russian reserve classification (categories C1 + C2) amount to 1.256 tcm.
In October 2009, the Company launched the second stage of Phase Two development at the Yurkharovskoye field, providing the Company with the potential to increase annual productive capacity at the field by seven billion cubic meters (bcm) of natural gas and approximately 600 thousand tons of unstable gas condensate. As part of the second stage development, the Company launched two additional processing trains for separating natural gas, enabling the field to reach annual natural gas and gas condensate production volumes of 23 bcm and two million tons, respectively. With the launch of the second stage, NOVATEK has the productive capacity to produce up to 44 bcm of natural gas per annum.
In 2009, gross production for NOVATEK totaled 32.78 billion cubic meters of natural gas and 3,049 thousand tons of liquids. Natural gas production increased by 1.89 billion cubic meters, or by 6.2%, whereas gross liquids production increased by 463 thousand tons, or by 17.9%, as compared with the corresponding gross production in 2008.
In the first half 2010, gross production for NOVATEK totaled 18.4 billion cubic meters of natural gas and 1.7 million tons of liquids. Natural gas production increased by 2.5 billion cubic meters, or by 15.4%, whereas gross liquids production increased by 273 thousand tons, or by 18.5% as compared with the corresponding gross production in the first half 2009.
In the second quarter and first half 2010, NOVATEK processed 833 and 1,649 thousand tons, respectively, of unstable gas condensate at the Purovsky Gas Condensate Processing Plant.
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