Upstart Russian Oil Firm, With Goldman Sachs Backing, Bucks Industry Blues | 3/10/2019 | Staff
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YARAKTA OIL FIELD, Russia (Reuters) – In the frozen taiga of eastern Siberia, where bears roam in spring after waking from hibernation, an independent Russian oil company is bucking the domestic industry trend by rapidly ramping up its output and expanding operations.

Irkutsk Oil Company, known by the Russian acronym INK, has increased its crude production levels 30-fold over the past decade and has negotiated access to a pipeline network that allows it reach the Asian market.

Company - Reuters - Investments - Years - Gas

The company told Reuters it is planning investments worth $3-$4 billion over the next three years, including developing its gas business by building four processing plants.

INK stands out in the Russian oil sector, more than half of which is in state ownership, and is dominated by massive players like Rosneft and Lukoil. Production growth in the sector has been sluggish and a combination of low oil prices and Western sanctions have weighed on new investment.

Prospect - Industry - Landscape - INK - Throwback

There is no immediate prospect of the industry landscape changing, leaving INK as a throwback to the 1990s, when the state had a smaller role and enterprising businesses blossomed.

However, its experience suggests there are still opportunities in the sector for smaller, nimbler independent players, backed up by some international know-how and a dose of good luck.

INK - US - Sanctions - Russia - Energy

INK is not subject to the U.S. sectoral sanctions that apply to Russia’s biggest energy firms and which place restrictions on the type of financing they can attract from Western creditors. INK’s minority shareholders include Goldman Sachs and the European Bank for Reconstruction and Development (EBRD).

Its crude production was 9 million tonnes last year, or 180,000 barrels per day (bpd) – small beer compared to the 230 million tonnes, or 4.6 million bpd, produced by Rosneft.

Company - Series - Obstacles - Brakes - Growth

The company faces a series of obstacles that could put the brakes on its growth, including the increasing risk of being...
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