INK commits US$5.2bn to gas business
Thursday, Jun 07, 2018
Irkutsk Oil Co. (INK) has rolled out plans to spend a further US$5.2 billion on developing its natural gas business within the next six years.

Like other independent operators in Eastern Siberia, the company has struggled to find a way of monetising its gas resources effectively, amid limited local demand and a lack of export options. Speaking at an industry congress on June 1, INK’s deputy finance director Yakov Ginsburg noted that the producer had already invested 41 billion rubles (US$660 million) on building up its gas business.

The company launched a 1.3 bcm per year gas processing complex at the Yaraktinskoye field in Irkutsk in November last year. The plant produces commercial supplies of propane, butane and gas condensate, according to INK’s website. Condensate is exported via the Eastern Siberia-Pacific Ocean (ESPO) pipeline, while propane and butane volumes are pumped via a 196-km pipeline to an LPG storage and shipment unit in Ust-Kut.

Supplies are then dispatched to local customers via road and rail.

Moving forward, INK intends to invest a further 320 billion rubles (US$5.2 billion) in its gas programme by 2024. Under the project’s second phase, three more gas plants will be built at the Yaraktinskoye and the nearby Markovskoye deposit by 2020, lifting overall processing capacity to 21.6 mcm per day (7.9 bcm per year).

The third phase calls for the construction of a 600,000 tpy polyethylene complex in Ust-Kut by 2023, along with an adjoining 100-MW gas-fired power plant. INK has not yet announced reaching a final investment decision (FID) on this stage, however. Under a proposed fourth phase, the company may also launch a programme to utilise methane at the petrochemicals plant.

Eastern Siberia contains almost 4.5 tcm in proven, recoverable gas reserves, according to Rosnedra, but these reserves remain mostly unexploited because of a lack of domestic and export infrastructure. The launch of the 38 bcm per year Power of Siberia pipeline to China by late 2019 is unlikely to reap much benefit for other gas producers like INK, given state-owned Gazprom’s monopoly over exports.

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