Innovate, Cut Costs: How A Russian Oil Firm Navigates Global Supply Curbs | 8/9/2017 | Staff
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ALMYETYEVSK, Russia (Reuters) – A global deal cutting crude output has forced mid-sized Russian oil company Tatneft to curb flows at some fields, leaving it with lower revenues but little relief from maintenance and running costs. Its response: innovation.

Yelkhovneft, a Tatneft unit in the semi-autonomous republic of Tatarstan some 1,200 km (750 miles) southeast of Moscow, has cut oil output by 6.6 percent since May, following an extension of the supply-reducing deal led by Russia and Saudi Arabia.

Profits - Cut - Production - Emphasis - Costs

“Faced with lower profits due to the cut in production, we have put greater emphasis on bringing down operating costs,” Azat Khabibrakhmanov, head of the Tatneft unit, which produced 3.3 million tonnes of oil last year, told Reuters.

The unit has oil pumps in two colors: green brings lighter crude to the surface while yellow draws heavier oil. Under the global deal, aimed at boosting the price of oil, Yelkhovneft’s output of both types is down.

Pumps - Rapeseed - Flowers - Khabibrakhmanov - Unit

Standing near one of the pumps, surrounded by yellow rapeseed flowers, Khabibrakhmanov said his unit was scaling back production mainly at wells with low flow rates, particularly those with a high water content.

“This has given us a certain stimulus to find new solutions for cutting production costs, bringing in new energy-efficiency technologies,” he said.

Yelkhovneft - Percent - Tatneft - Oil - Production

Yelkhovneft, which accounts for around 12 percent of Tatneft’s oil production, is not altering key processes such as drilling or enhanced oil recovery – indeed, the company wants to be able to ramp up output quickly once the supply deal expires.

Instead, Yelkhovneft is scaling back measures aimed at limiting water flow and various other types of work, including in the rock formation at the bottom of a well.

Way - Oil - Production - Levels - Month

“This way, we will be able to restore oil production to its previous levels quite quickly, I think in a month or two,” Khabibrakhmanov said.

Yelkhovneft has also started drilling...
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