Updated March 31, 2008

   Tatar authorities intensify the negotiations with the leading world oil companies concerning exploitation of viscous oil (bitumen) deposits on the territory of Republic. There is no time to reflect as in three-four years the oil extraction in Tatarstan will begin to reduce rapidly.

   Tatarstan Prime Minister Rustam Minnikhanov was quoted as saying that the Republic considers the opportunity of attracting the American corporation Chevron to develop bituminous deposits located on its territories. Last year Chevron Neftegaz Inc. (CN) president Ian MacDonald declared that the company was ready to participate. However, the republican authorities stated then that they did not conduct any negotiations with CN as for this. According to Minnikhanov, the presentation of Chevron technologies passed at the highest level just recently. Tatarstan president Mintimer Shaymiev and representatives of this corporation were present at the meeting.

   However, the situation is spiced up with the fact that the main republic oil extraction company – Tatneft OJSC (TN) – already has an agreement about intentions to exploit bituminous deposits coupled with the rival – Dutch oil company Shell Exploration Company (RF) BV. It was signed on September, 27 2007. And, obviously, in order to please the owners, chairman of Shell Corporation in Russia Chris Finlayson underlined that Tatneft would occupy the leading positions in the area of extra viscous oils’ development in Russia by means of Dutch oil company.

   Now Tatneft and Shell establish a joint venture to extract and process the republican bitumen. Chevron appearance does not quite mean that Tatneft has argued with Shell. It is rather an attempt of the republican authorities to force a maximum possible result out of "strategic reserve", which are the bitumen deposits in Tatarstan. The oil extraction has been conducted here since the middle of the last century. Therefore, the majority of the large deposits is in the last stage of production. Thus, there is nothing to compensate them. Last year almost 32 million tons of oil was extracted in Tatarstan. However, even according to the forecasts of the official authorities, this level will be retained within no more than three-four years. It will begin to go down further, and this process can not be stopped even by means of the active expansion of the republican small oil companies, the majority of which is connected with Tatneft, beyond the Republic – to the Samara, Saratov, Ulyanovsk and Orenburg regions, Udmurtia and Bashkiria Republics, as well as Perm area.

   The bituminous deposits’ development will allow Tatarstan to retain the level of the average annual oil extraction at the level of 30 million tons, as well as to provide the basis for the raw material safety of the republican petrochemical projects that are actively developing in the region now. Bitumen reserves on the territory of Tatarstan are estimated at 1,4-7 billion tons. The soviet geologists named far bigger figure – around 21 billion tons. Moreover, extra viscous oil reserves are located on almost all territories around Tatarstan, including Bashkortostan and Samara region.

   Tatneft does not have enough experience in economic production of bitumen, and there has not been the keen necessity until now. Tatneft drilled two couples of wells at the Ashalchinsk deposit as an experiment and applied there the Canadian vapor-injection technology at bitumen development. The result is 15 tons net oil a day from one couple of wells. However, the Tatarstan oil companies are obviously displeased with the profitability of this process as well as with high risks during conducting of geological exploration works.

   The beginning of the official negotiations with Chevron, especially at the level of the Republic chief executives, can be considered as a method to pressure Shell in the matters of joint venture establishment and ways of profit sharing from the general activity. There is another version. The new player could be offered the local partner not related to Tatneft, but controlled by someone from the representatives of the republican authorities. The Tatarstan group TAIF, for example, could be such partner. It is associated with the name of the younger son of the Republic president – Radik Shaymiev. TAIF accumulates the greater part of the republic petrochemical assets, but now this group of companies retreats under Gazprom pressure and can claim to the developer role of the Republic bituminous inheritance.

   It is evident that the Tatarstan authorities have less time to take advantage of the favorable opportunity to start the industrial development of bitumen deposits in the Republic. Thus, not only in terms of economic but also political reasons. Those, who will control the extra viscous oil extraction (bitumen), will be one of the most influential political figures of Tatarstan Republic in the nearest thirty years.