Fortum has decided to participate in the first phase of the South Shapkino oil field development in northwestern Russia and to sell its interest in the Suneinah concession in Oman. This reallocation of assets is in accordance with Fortum´s target to focus its business to northern Europe. It is also in line with the aim of maintaining a strong balance sheet.
In the first phase, Fortum´s investment in the South Shapkino oil field will be 10 million USD. License holder and responsible for field development and operation will be SeverTEK, a company owned 50 % each by Fortum and Lukoil´s subsidiary KomiTEK. The two owners have jointly initiated a process to obtain partial external financing for the entire project, a total investment of USD 360 million (USD 180 million each) over three years.
The construction work in South Shapkino is planned to be made during the period 2001-2004. Production in this field is expected to begin in 2003, and reach a maximum volume of 2.6 million tonnes of crude oil annually. The development of this field will increase the volume of Fortum´s current oil and gas reserves by 30%. Part of the production can be used as feedstock at Fortum´s Porvoo refinery. The project also involves the building of a new 100 km oil pipeline and is designed according to Fortum´s strict environmental, health and safety standards.
Fortum was one of the first western companies to start evaluation of the large undeveloped oil and gas fields in northwestern Russia. The oil reserves of the South Shapkino field, located in the Timan Petshora area, total 23 million tonnes.
Fortum currently holds a 35 % interest in the Suneinah concession in Oman. Fortum has retained the London based investment bank Waterous as advisor in the disposal process.
For further information, please contact:
Veli-Matti Ropponen, President, Fortum Oil and Gas Sector, tel. +358 10 452 4115
Carola Teir-Lehtinen, Senior Vice President, Corporate Communications, tel. +358 10 452 4118