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Goldman Sachs-Backed Russian Oil Firm Plans Expansion

Independent Russian oil and gas producer Irkutsk Oil Company (INK), which has Goldman Sachs as a shareholder, stands out in the state firm-dominated sector in Russia and plans to invest billions of U.S. dollars to develop its gas processing business and boost oil production.

In 2013, Goldman Sachs International became a shareholder with a 3.75 percent stake in INK. The Irkutsk-based oil firm focuses on the geological study, exploration, and production of crude oil, condensate, and natural gas in the Irkutsk region and the Republic of Sakha (Yakutia) in eastern Siberia.

Last September, INK’s chairman and COO Nikolay Buynov met with representatives of the senior leadership of Goldman Sachs to discuss partnership opportunities, including the construction of a gas chemical plant, Irkutsk Polymer Plant, with planned production of 650,000 tons of polyethylene, INK said.

Unlike most of the large Russian oil companies, INK has boosted its crude oil production in recent years and plans to invest between US$3 billion and US$4 billion in the next three years in building gas processing plants, the company told Reuters reporter Olesya Astakhova.

Sure, INK’s crude oil production is tiny compared to that of oil giant Rosneft, but the Irkutsk company has been bucking the trend in Russia’s oil industry in recent years where the sector dominated by large companies have been sluggish to increase output, even before the OPEC/non-OPEC deal capped Russia’s oil production.  

The OPEC+ deal has come at a good time for the company, INK’s head of oil production Dmitry Zotov told Reuters.

“The OPEC deal has given us a chance to stop and draw breath,” Zotov said.

INK benefits from the fact that it is not under Western sanctions like some of the major energy companies in Russia. The downside of operating in eastern Siberia, however, is harsh weather in remote locations and shortage of skilled staff, Reuters notes.

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By Tsvetana Paraskova for Oilprice.com

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