Russian Oil and Gas Company Invites Partners to Safe Haven

Russian Oil and Gas Company Invites Partners to Safe Haven


Three foreign companies might join the Vostok Oil project focused on geological exploration, processing and sales of gas and oil. It is being implemented by Rosneft on the Taimyr Peninsula in the north of the Krasnoyarsk Territory. previously wrote about the prospects for oil production in Taimyr. There is a whole cluster of large fields owned by Rosneft. A year ago, Rosneft bought the Independent Oil and Gas Company of Eduard Khudainatov, the holder of the Payakhskoye field license and a likely Vostok Oil participant, thus consolidating the main hydrocarbon reserves in the area. There is also the Vankor field in the Turukhansk district of Krasnoyarsk territory, where Russian Oil Company No. 1 has been conducting commercial production for the second decade.

Vostok Oil is now a project of vital importance to Rosneft which staked literally everything on it. The company has dismissed the speculations about the outgoing hydrocarbon age and the complete victory of “green energy.” According to Rosneft experts, mankind will need oil and other traditional types of resources for a long time.

Renewable energy sources (RES) can only be supplementary. Moreover, they are not suitable for every climate, landscape and location. In many ways, this project is not just economic, but also political. The significance of Vostok Oil can be compared to Nord Stream 2.

The “western partners” will obviously try to slow it down by all means. That is why the question of foreign investors’ participation is crucial. Even Rosneft cannot afford to meet all the expenses by itself. The total liabilities of the holding had exceeded 8 trillion rubles ($107.52 bln) by the end of 2020.

Trafigura, a major international oil trader, is now the co-investor in the project. Last December, it bought a 10% stake in Vostok Oil. In November, reports said that ONGC Videsh Ltd, Indian Oil Corp Ltd and Oil India Ltd, based in India might join the Taimyr development participants. These are state-owned companies united in a consortium. They are conducting technical examination of all the fields belonging to Vostok Oil, to estimate the real reserves in Taimyr. Then the financial assessment will take place. If the results of the audit are positive, an appropriate decision can be made.

“This project can make the Krasnoyarsk Territory the main starting point for oil and gas production not only in Russia, but also in the world,” said Krasnoyarsk Territory Governor Alexander Uss. “We plan to increase oil production by 36.6% by 2024 thanks to the Vankor cluster fields and Vostok Oil investment project,” said Yevgeny Afanasyev, Minister of Industry, Energy and Housing of Krasnoyarsk Territory.

The construction of the future oil loading terminal Bukhta Sever is among the most recent news related to the project. The terminal will operate in conjunction with the Northern Sea Route. According to Rosneft's press service, the site has already been prepared for a temporary berth for delivery of construction materials. The construction of shift camp has started. Even just the first phase of Bukhta Sever will have a capacity of 30 million tonnes of oil a year. The project target is to produce 100 million tonnes by 2030.

“Trafigura's participation proves that Vostok Oil, with its colossal resource base and obvious logistical advantages, is the future of the global energy industry. The project can become revolutionary in the global hydrocarbon market. The possibility of deliveries via the Northern Sea Route to the European and Asian markets is an important competitive advantage. It makes investors very interested,” says Valery Andrianov, the senior analyst of WMT Consult.

According to the latest data, Vostok Oil's needs for investment were estimated at 11 trillion rubles ($147.84 bln.) As the Legislative Assembly of Krasnoyarsk Territory explained to, a 12 billion rubles ($161.28 mln.) package of tax benefits was developed for the project at the regional level. The payoff over the next two years should be about 80 billion rubles ($1.08 bln.) All in all, tax revenues from oil companies to the regional budget are expected to reach 1.4 trillion rubles ($18.82 bln) by 2036.

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