Tatneft’s glorious history from oil springs to high technologies

The beginning of the rise to the pinnacle 

The first oil well in the republic started to function in 1943, while the gigantic Romashkinskoye oil field that fully met the global standards was discovered in 1948. Thereafter, the Soviet Cabinet decided to incorporate Tatneft oil company in 1950. By the 1960s, over one-third of all Soviet oil produced at that time was extracted from Tatarstan’s soil. Indeed, Tatarstan’s oil provided the Soviet government with enormous resources to develop its economy. The ‘peak value’ occurred in 1975, when a total of 103.7mln tons of oil was produced in the republic. 

The year 1976 marked the beginning of a new era in the company's history which was characterized by a steady decline in oil output. But science and new technologies have helped Tatneft not only to curb the decline, but also to significantly boost the volumes of its oil output. The depletion of major near-surface oil-bearing reserves later forced the company to switch to exploration for deposits in more complicated geological locations. The Romashkinkoye oil field has served as the basis for the development of modern and scientifically-proven system for oil reserves exploration and production. Today, almost half of Tatneft’s raw materials are extracted by enhanced, state-of-the-art oil recovery methods. The company's experience of retaining the oil production level via adoption of new and highly advanced technologies has been widely recognized and this practice is now broadly used in the country’s other oil-producing regions. 

“Today, Tatneft has successfully evolved from a raw feed plant into a strong, vertically-integrated holding that now includes subsidiaries specializing in different activities, from oil production to petrol filling stations business.”

In 1994, Tatneft went public, thus becoming the first Russian oil major to enter the global stock markets with securities that won it worldwide recognition. Historically, Tatneft was for a long time the only local major oil company that specialized exclusively in oil production in Russia. To rectify this situation, Tatneft’s management decided to create its own network of petrol filling stations in Russia and Ukraine. Later, another strategic decision was taken to merge the company, Nizhnekamskshina and Nizhnekamsky Technical Carbon Plant into a single entity. The first significant project involving Taftneft in its new capacity was the production of highly-efficient KAMA-EURO-branded radial car tires manufactured under an official license from Pirelli. 

The volume of tires production at Nizhnekamskshina averages about 12.4mln units per year. Consequently, the Nizhnekamsky Plant’s production share in relation to the total domestic tires output has increased by 50%, about a quarter of which is exported to other regions and countries. The commissioning of the Nizhnekamsky Solid Metal Core Tire Plant in autumn of 2009 marked the dawn of a new stage in the development in the nation’s tires production industry. So far, none of Russia’s domestic car tire manufacturers has created such production facilities with such rates of output in the country.

The Minnibayevsky Gas Processing Plant has also become a part of Tatneft, which now only needs to develop its own oil refining facilities to become a fully fledged vertically integrated holding. To this end, the company is currently involved in the development of TANEKO in Nizhnekamsk that will become one of the largest oil refining and petrochemical complexes in the country. Its production output will amount to 14mln tons of high-sulfur crude oil per year. The first phase of the project, which envisages the development of an oil refinery with a projected processing capacity for up to 7mln tons of oil per year, is scheduled for commissioning this autumn. 

When finally completed, the refinery complex’s products will be sold through Tatneft’s network of petrol filling stations in Russia, Belarus and Ukraine. The network currently has over 620 stations. Therefore, Tatneft has today successfully evolved from a raw feed plant into a strong, vertically-integrated holding that now includes several subsidiary companies, from oil exploration and production to petrol filling stations business in different countries.

Abundant resources for development

During the global financial crisis, which broke out in 2008, Tatneft was one of the few Russian companies that were able to retain its oil production levels, thanks to its high potential and timely adoption of anti-crisis measures. “The crisis became a test on Tatneft’s economic stability and strength,” Shafagat Takhautdinov, the company’s CEO, said. “The outcomes of the tremendous, results-oriented tasks executed in the past that was aimed at the company’s financial reinforcement and improvement of its corporate management, have helped us to pass this test with flying colors,” he added. “The company has also carried out other strategic tasks aimed at stabilizing and increasing commercial oil and gas outputs, expansion of its resources base and product-line diversification.”

One of the company’s most important anti-crisis measures was directed at enhancing its energy and resources efficiency. To maintain the level of its competitiveness, Tatneft has used its own scientific centers and technical bases for the development and implementation of new equipment and technologies in all its production processes and activities. At present, Tatneft’s total resources base, according to an expert conclusion by the international consulting firm Miller and Lents, is estimated at 862mln tons of proven oil reserves, and when considered together with the so-called ‘possible and probable’ reserves, this figure rises well over 1bln tons. Such stock will be more than enough to ensure sufficient oil production level for the next 30 or more years; that is, if these reserves are not boosted further by geological surveys or increases in the oil stratum index. However, the growth rate of Tatneft’s oil reserves over the last 10 years has superseded its overall production output by 1.2 times, a positive trend that enables the company to look forward to the more distant future with more confidence and certainty. 

Currently, the company is drilling for oil on a total number of 82 licensed fields, while 13 different oil companies incorporated with Tatneft’s capital are presently actively involved in geological exploration operations for energy resources in the Orenburg, Ulyanovsk, Samara, Nenets Autonomous District regions and Kalmykia. Besides, Tatneft is currently operating oil deposits abroad, notably in Syria and Libya. The company is also actively searching for alternative sources, such as the superviscous, bitumen oil, whose gross reserve in Tatarstan is estimated at over 7bln tons, for boosting its output and replenishment of oil reserves. Tatneft has devised new technologies for developing these potentially lucrative raw materials for Russia and has been performing pilot project works with the aid of these technologies on its production sites since 2006. 

Full responsibility for ecology

Today, Tatneft is operating in 22 administrative districts in Tatarstan. The fact that the overall welfare and social status of the population in the south-eastern part of the republic depend mainly on Tatneft has puts special responsibility on the company and its management. Indeed, as a socially responsible and oriented company, Tatneft makes huge contribution to finding positive solutions to social problems and development requirements of the region. This is evident in the fact that hundreds of millions of rubles are annually invested into the construction, reconstruction, maintenance and other repair works for dozens of social facilities in the region. 

The ‘Gifted Children’ special foundation, set up with the help of Tatneft, provides huge financial support for talented children, which is a significant contribution to the official efforts aimed at upbringing of highly literate future generations. Another Tatneft-funded organization, the Ruhiyat spiritual revival foundation, also carries out comprehensive charity activities in arts and literature. Besides, Tatneft also provides enormous funds for the construction and reconstruction of mosques and churches in south-eastern Tatarstan. The company has also distinguished itself in terms of bankrolling development of sports in general, and ice hockey in particular, in the republic. For instance, the Ak Bars Hockey Team, sponsored by the oil giant, has successively won the Russian National Hockey Championship titles back-to-back in recent years. Besides, the company is currently executing a long-term popular sports development program aimed at building additional new sports facilities in the republic that can be used for various sporting activities by thousands of children. 

Notably, environmental protection is one of Tatneft’s high-priority objectives. Indeed, the company has been a pacesetter in terms of adoption of more ecologically friendly industrial policies, being the first in the country to adopt a specific environmental policy in the oil sector. At present, the company is implementing its third environmental safety program to be completed by 2015. This program contains environmental protection measures for the company’s 34 main business activities and for all the components of the ecosystem, from monitoring the states and conditions of the atmosphere and water to land and forest resources. 

Special task orders from the government

Commenting on the company’s today strong status in the republic, Rustam Minnikhanov, the president of Tatarstan, who also doubles as Tatneft’s board of directors chairman, says the oil major, marking its 60th   anniversary this year, will continue to remain the main locomotive of the republic’s economy for several years to come. He then urged the company to stabilize its annual oil production output within a short term at a level of 25mln tons, a task that the company’s management believes is realistic and fully achievable. This is evident in the fact that since 2000, the company has increased its oil production volume by 13%, and produced almost 25.85mln tons of oil in 2009, a record-breaking figure in the past 15 years. 

The company management is confident about its future. Indeed, the management believes it has the resources to produce the fourth billion volume of oil today, while the company’s scientists are even more optimistic, claiming that Tatneft can even produce the fifth billion volume of oil, if natural bitumen is taken into consideration. It will not be easy to produce this amount, as this will require new, highly-effective technological solutions, but the company’s CEO believes that Tatneft and its staff are fully ready to do the impossible. “Besides, the company has exceptionally sound financial indicators as well as excellent ratio of own capital to borrowed funds,” he said. “The total amount of net assets rose year-on-year by 18.2% to reach 266bln rubles in 2009.”

Today, Tatneft’s accumulated financial resources give it an opportunity to implement serious, highly ambitious capital-intensive investment projects, while the company’s best technological know-how and unique experiences in the industry will enable the oil giant to create an innovation polygon in Tatarstan that can be used for testing and further development of new oil discovery and drilling methods not only in the republic, but also for the entire country.