Russia's Gazprom Neft has set its sights on fresh drilling in West Siberia after winning five-year exploration licences for three blocks in the southwestern part of the Khanty-Mansiysk region.

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The oil producer used a recently approved legislative option to claim rights for blocks within 20 kilometres from borders of existing licences.

Gazprom Neft will acquire additional seismic data before drilling wildcats on the Snezhny, Ledovy and Kholodny blocks, hoping to discover commercial hydrocarbon reserves in order to secure development rights for the assets.

The total area of the three blocks — which lie next to a group of greenfields that are known as Zima — is about 1400 square kilometres, according to a statement from the company.

Zima includes five blocks in the Khanty-Mansiysk region and development started at the fields in 2017. Just two years later, Gazprom Neft started commercial oil production from the first key field – Alexandra Zhagrina.

Despite the field boasting recoverable reserves of over 800 million barrels, geology has proven challenging, with Gazprom Neft having to drill wells with horizontal sections, followed by multi-stage fracking, to increase productivity at development probes.

The oil producer has also enjoyed a reduced oil production tax rate at the development.

Production at Zima is expected to grow to more than 120,000 barrels per day in 2023 as against 10,000 bpd in 2019, which would put it among the top three of the company’s greenfields, Gazprom Neft said.

The company also expects to obtain similar exploration licences for five blocks in the Yamal-Nenets region by using the same legislative option.

The option offers an exclusion from the requirement for authorities to hold an auction for licences and allows for the award of licences on direct application in the event that the applicant already operates producing oil and gas fields in vicinity.

Share offer proposal

State-controlled gas producer Gazprom holds a 95% stake in Gazprom Neft, with the remaining shares in the hands of minority investors.

However, Gazprom Neft chief financial officer Alexei Yankevich said at an investment forum earlier this week that talks are ongoing with the gas giant to reduce its holding in the oil producer by offering some of its shares on the open market.

The increase of the company's free float to at least 10% will permit the Moscow Stock Exchange to include Gazprom Neft on its index of Russian blue chip corporations, potentially driving up its share price, according to Yankevich.

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At the same time, the sale may generate revenues to help Gazprom to offset its growing losses, according to industry analysts in Moscow.