STATE OWNERSHIP HAS CONTRIBUTED TO ZARUBEZHNEFT’S ENVIABLE REPUTATION FOR RELIABILITY Zarubezhneft is a powerful player in some of the world’s most important oil and gas fields.

Russian expertise in oil and gas exploration and production has been instrumental in establishing industries around the world for more than 30 years. The State Enterprise Russian Foreign Economic Association Zarubezhneft, was established in 1967 to create oil and gas industry projects abroad, and has helped to develop industries in countries ranging from Algeria, Iraq, Yemen, Libya and Syria to Cuba, India and Vietnam.

Zarubezhneft continues to be a powerful player in some of the world’s most important oil and gas fields and, although a state enterprise, it is self-financing. General Director Nikolay Tokarev points out that its input into the Russian budget accounts for more than half a billion US dollars.

Being a state enterprise has its advantages, according to Mr. Tokarev. “The state determines our activity very clearly and strictly, but our status helps us significantly,” he says. “Our partners like to deal with a stable enterprise, which will not disappear tomorrow. Taking into account the scale and geography of our activities, our high ratings and our reputation in the global oil community, foreign companies as well as state organizations see us as reliable.”

The main focus of Zarubezhneft’s activities is currently Vietnam. “We started working there in the 1980s and, although many companies had been working there before us, it was only Zarubezhneft which managed to find really big oilfields,” says Mr. Tokarev.

Together with PetroVietnam, the country’s general oil and gas company, Zarubezhneft created a joint enterprise called Vietsovpetro, now 22 years old, to conduct oil and gas exploration and production on Vietnam’s continental shelf in the China Sea. Seven oilfields were discovered, and today Vietsovpetro’s revenues are a major contributor to Russian finances among all the international projects with Russian participation.

“Overall, more than 116 million tons of oil have so far been pumped. There are around 7,000 people working on the Vietnamese project, with some 700 specialists from Russia,” says Mr. Tokarev.

“In terms of its economic effectiveness, this enterprise ranks as one of the best oil companies in the world. Vietsovpetro is one of the most successful Russian-Vietnamese joint projects. It is also a truly unique project, since the oil was found at a depth of 6,000 meters (20,000 feet).”

More locations in the South China Sea are being explored. Last year, Zarubezhneft, PetroVietnam and Japanese company Idemitsu signed a contract for further oil and gas exploitation.

In the past three years, Zarubezhneft has renewed activities in several countries. It won a tender to develop two big oil fields in Syria. A service contract has been signed with the Indian state oil company ONGC and new contracts are under consideration.

The Russian enterprise is also stepping up its operations in the CIS countries, especially in the Caspian Basin states of Kazakhstan and Turkmenistan.

Before the military actions began Zarubezhneft was a participant in the United Nations ‘Oil for Food’ humanitarian program in Iraq. In 1972, the enterprise was key to the development of the Rumaila field, the richest oilfield in Iraq.

“After 1991 that work was significantly reduced, although Zarubezhneft did not leave the country and until March, 2003 continued to fulfill our service and supply contracts within the framework of the UN “Oil for Food program”, says Mr. Tokarev.

Besides, in 1997 Zarubezhneft in compliance with OJSC “LUKOIL” and State Enterprise VO “Machinimport” signed an agreement with the Iraqi Ministry of Oil on exploration and oil production at the second course of the “West Curna” oil field.

Mr. Tokarev says Zarubezhneft, in an alliance with Rosneft and TotalFinaElf, had some plans to develop the Ben Umr field in Iraq, one of the biggest in the country with an estimated 3.5 billon tons of oil reserves.