4. Purchase of a field

May 20th, 2010

A Russian metallurgical company was offered a license on the gas market located in a close vicinity of their production site.

In theory, resources of that field could help to solve energy-concerned problems. But what would the end gas price be, would the purchase be justified? What new risks would arise in relation with the company’s entrance to the gas market?

We assessed:

  • field development prospects:
    • reserves estimate;
    • possibilities of transportation to end consumers;
    • end gas consumer’s price.
  • Prospective market prices.

The resulting recommendation was: not to purchase the field, as the advantage in price would be minor, having been substantially overweighed by risks of conflicts with the key gas players and local authorities.