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UPDATE - MOL plans to invest $87m in Matyushinskoye, Siberia this year

Hungarian oil and gas company MOL invested $154m between 2007 and 2010 at the oil fields in Russia's Matyushinskoye block (Siberia) and plans to invest $87m this year, Laszlo Gerecs, the MOL group's Russian field development and production manager told MTI on Friday.

MOL plans to spend further substantial amounts on developments at the site in the next three years on exploration, drilling new petroleum production wells and financing the first phase of a 90-km oil pipeline, he said.

The investments are also required because MOL has to build all infrastructures there from roads to power supply.

Gerecs added that the MOL group projects a substantial production increase from the block in the short and mid-term, over the next 2-3 years, as a result of the intensive investments in the Matyushinskoye block. Around 40% of the group's oil production comes from Russia, at 19,200 barrels per day last year, which is expected to grow in the near future.

Gerecs said 100% of the exploratory drillings at the block have been successful, an excellent ratio compared to a global average of 40%.

The long-term, exploration-driven investment program at the block began in April 2007 after MOL purchased a 100% holding of Matyushkinskaya Vertikal.

The block has an area of 3,231 square kilometers. When the area was acquired, there was one smaller oil field there with daily production of 600 barrels, at around 30,000 tons per year.

As a result of the successful exploration program, reserves at the area increased to 29m barrels by the end of 2010.

Gerecs said MOL plans two exploratory drillings for 2012 and four in 2013. If these are successful, they could add up to 20-35m barrels to the reserves of the area.

The Matyushkinskaya block currently has 39 operating oil wells, a number set to increase by 6-7 by the end of this year.

MOL has three 100%-owned subsidiaries in Russia: Matyushkinskaya, which employs more than 100 workers; Baitex, another production company with oil reserves of 61.9m barrels; and MOL West Siberia, which is exploring the Surgut-7 block.

MOL holds a 50% stake in another oil production company, ZMB. Russneft owns the other half of the JV.