Rosneft Delays Key Field Launch, Cuts Growth Outlook

MOSCOW , Sept 3 (Reuters) - Russia's largest oil firm Rosneft delayed on Wednesday the launch of a huge East Siberian field and cut its output forecast, casting further doubts over Russia's ability to avoid a production decline this year. Rosneft had planned to launch the giant Vankor deposit at the end of this year and the start up was seen as key for Russia to avoid its first fall in output in a decade.

But Rosneft's vice-president Mikhail Stavsky told a conference call on Wednesday Vankor would not be launched before mid-2009. "I would like to point out that we will launch the project later because we have decided to expand it," he said.

"It is impossible to increase planned peak production by more than two times and to meet the same tight time schedule stipulated in initial field development plans," he added.

Rosneft is responsible for over a fifth of Russian oil output and has been growing quicker than any other Russian oil company in the past years on the back of acquisitions of assets of bankrupt firm YUKOS and investments in new fields. The company is now expecting to increase production by 9 percent this year, down from the previous forecast of 11 percent. In 2007, Rosneft produced 101 million tonnes of oil (2.03 million barrels per day).

Rosneft bought Vankor in 2003 and had estimated the field's reserves at 125 million tonnes at that time, and peak production at 12 million tonnes. Stavsky said Vankor oil reserves have increased since then more than fourfold to 515 million tonnes and peak production is now expected at 25.5 million tonnes per year or over half a million barrels per day.

Rosneft's vice-president Peter O'Brien told the same conference call he expected Rosneft's capital expenditures to rise by around 10 percent this year from $7 billion last year due to higher spending on projects like Vankor and rising production.

The shares of Rosneft fell 5 percent in London and 2.73 percent in Moscow, broadly in line with a 3 percent decline in MICEX's oil and gas index.

(Reporting by Dmitry Zhdannikov; editing by Melissa Akin) Keywords: ROSNEFT PRODUCTION/ cmr COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved.

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