Oil Service

Organization of Servicing

The formation of the external services complex undertaken by the Company is conducted within the framework of the main phase of restructuring and is based on withdrawing non-core and supporting activities from the Company's structure. Those non-core services include:

• mechanical services;
• energy services;
• pipeline services;
• construction services;
• transport services;
• well workover and EOR;
• oil field service submersible assemblies and pumping units.

Transition to external (contract) oil servicing fundamentally changed the organization of the production management. Work by the new pattern "customer-contractor", and arrangement of specialized monitoring of works by supervisors and work administrators provided for increased overall responsibility of the parties and growth of quantitative and qualitative indicators of the work.

Construction of Wells and Geologic Exploration Facilities

Drilling of production and exploratory wells within the Republic of Tatarstan is performed by OOO Tatburneft Management Company which unites five Drilling Administrations and other subdivisions.

Up to 431 wells including 280 production ones which account for 423 thousand tons of oil during the first year of operation were drilled and construction completed in 2009. The production rate of newly launched wells after drilling increased by 8 % compared to 2008 and reached 9.5 tons a day.

Other than that commercial drilling speed increased by 3% compared with 2008 and the time required for commissioning new wells and completion was significantly reduced accounting for 16% decrease versus 2008.

Advanced technologies were applied when drilling 43 horizontal wells with the average production rate of 11.4 tons per day.

The Company also implemented new technologies of drilling nine downhole splitters with average production rate of 16.4 tons per day. 56 side tracking jobs with drilling lateral and lateral horizontal wellbores were completed, as well as 17 wells of small diameter were drilled.

Transition to drilling of wells by individual cost estimates allows the Company to save up to 286 million rubles of its investment fund.

In order to perform well construction works the Company adopted a supervisory control Standard defining the procedure of planning, management and evaluation of the work being performed.

It's worth noting that it didn't take a long to see the results. Application of the Satndard in 2009 resulted in reducing the costs of OAO TATNEFT for well construction by 462.8 million ruble.

Geophysical Service and Field Studies

Performance of field geophysical and hydrodynamic works as well as shooting and explosive works involving search, exploration, preparation for development and operation of oil and gas fields for OAO TATNEFT is carried out by TNG-Group Management Company.

Implementing the TATNEFT policy for development of new territories, TNG-Group performs geophysical works and renders specialized services both in Russia and outside, including countries of Asia, Africa, the Middle East, and in the oil-bearing areas of CIS countries – in Uzbekistan and Kazakhstan.

Repair and Preventive Maintenance of Oil Field Equipment

The volume of oil production rehabilitated due to workovers amounted to 352.3 thousand tons in 2009 with the average daily well production rate growth coming to 3.5 tons per day making 35% versus 2008 and due to the oil recovery enhancement methods application coming to 3.1 tons per day. At present the workover is one of the most economically attractive projects among the geological engineering activities.

Hydraulic fracturing operations were performed at 113 wells. The average daily well production rate growth amounted to 3.7 tons per day.

The average mean time between failures of TATNEFT's wells increased by 11.4% versus 2008 and reached 1011 days. Our Company is the first among the major oil companies in Russia have exceeded the maximum level of 1000 days by this index.

General Construction Works

Management of construction capacities for erection of oil pipelines and water lines, technical piping of pipelines, capital repair of the tank farm and general construction works at all facilities of OAO TATNEFT are all performed by Glavneftegazstroyservice Management Company.

Commissioning of the fixed assets stock amounted to 5,255.9 million rubles in 2009, including inductrial assets construction (3,923.8 million rubles) and non-industrial construction (1,332.1 million rubles).

The Company's entities performed capital repair works of the fixed assets for the total amount of 2,453.6 million rubles. In aggregate 627 km of field pipelines were erected and replaced in 2009, including 320 km of oil pipelines, 242 km of water lines and 65 km of gas and product lines.