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Rosneft Begins Arctic Oil Terminal Construction

By Tsvetana Paraskova - Jul 26, 2022,

Russia’s oil giant Rosneft on Tuesday said it had launched construction works on an oil terminal for its Vostok Oil project in the Arctic, expecting the port to become the country’s biggest oil terminal by the end of this decade.

Vostok Oil, in Russia’s Far East, comprises several groups of oil fields holding an estimated 44 billion barrels of oil. Initial work on the project began in January 2021. The total cost of its development has been estimated at $170 billion over the lifetime of the fields. The Vostok Oil project in Russia’s Far North is close to the Northern Sea Route that Rosneft wants to use to ship oil to Asia.

Rosneft has also started drilling at the Payyakhskoye field, part of the massive Vostok Oil, the project’s chief executive Vladimir Chernov told Russian media on Tuesday. Rosneft expects oil to start flowing from the field in 2024, and the project Vostok Oil to deliver crude via the Northern Sea Route by 2027, Chernov was quoted as saying.

Western analysts, however, doubt that Rosneft will be able to keep the timeline for the massive project’s development as Western sanctions are depriving Russia and its state-owned oil and gas firms of access to capital and technology.

Last year, Rosneft was looking to attract some of the world’s largest oil trading houses to the Vostok Oil project, offering them to become investors in exchange for oil supply contracts.

This year, investors are abandoning Russian projects after Putin invaded Ukraine. One of those major traders, Trafigura, said earlier this month that it had exited its 10-percent non-operational passive shareholding in Vostok Oil, selling the stake to a Hong Kong-registered trading company for an undisclosed price.

The Western sanctions, which ban exports of technology for oil and gas to Russia, will also affect the timeline of the Vostok Oil development, analysts say.

The Payyakhskoye field, at which Rosneft started drilling today, could see first production by 2029 instead of in 2024, the Russian giant says, according to research firm Rystad Energy.

“Any delays in one part of the huge supply chain involved in the project will lead to the delay of the whole project,” Daria Melnik, senior analyst at Rystad Energy, told The Wall Street Journal earlier this month.

Rosneft Sells Stake in Vostok Oil

by Andreas Exarheas|Rigzone Staff|Wednesday, October 20, 2021

Rosneft has revealed that it has closed a deal to sell a five percent interest in the authorized capital of Vostok Oil LLC to a consortium of Vitol S.A. and Mercantile & Maritime Energy Pte. Ltd.

The deal was approved at a meeting of the Rosneft Board of Directors. The value of the transaction was not disclosed by Rosneft.

Low unit lifting costs and a low carbon footprint make Vostok Oil one of the most promising oil production projects in the world, Rosneft highlights on its website. The resource base of the project is said to exceed six billion tons of premium-quality sweet crude with a record low sulfur content of 0.01-0.04 percent.

By 2030, oil production at Vostok Oil is planned to be around 100 million tons, according to Rosneft, which noted that the project has a logistical advantage of supplying raw products produced at its fields in two directions at once - to European and Asian markets.

“We are glad that consortium of Vitol and Mercantile & Maritime Energy has joined our flagship project,” Rosneft Chief Executive Officer Igor Sechin said in a company statement.

“Vostok Oil has a sustainable economic model, which received positive assessments of international experts. Logistical advantages, vast resource potential, and high quality of oil, make Vostok Oil one of the most attractive investment projects in the global energy sector,” he added in the statement.

“This fact is confirmed by world’s leading traders Trafigura and Vitol participating in the project, which will give them access to ‘green barrels’ of Vostok Oil. The company continues its active work towards implementation of the Vostok Oil Project,” Sechin went on to say.

Back in June, Rosneft revealed that it and the consortium of Vitol S.A. and Mercantile & Maritime Energy Pte. Ltd. signed heads of terms for a deal providing the sale of a five percent stake in the authorized capital of Vostok Oil. At the end of 2020, Trafigura acquired a 10 percent stake in Vostok Oil.

The Vostok Oil project comprises 52 license areas with 13 oil and gas fields located within their boundaries. As part of the XXIV St. Petersburg International Economic Forum, Vostok Oil and Inter RAO Engineering concluded survey and design contracts to underpin the construction of Train 1 power generation facilities for the Vostok Oil project, Rosneft announced in June 2021.

Rosneft is the leader of the Russian oil industry and the largest publicly traded oil company in the world, in terms of production volumes among companies listed on Western stock exchanges, the company notes on its website. Its share in global oil production is six percent, Rosneft’s website shows.

India’s ONGC May Buy Stake In Rosneft’s Massive Arctic Oil Project

By Irina Slav - Sep 03, 2021

A consortium of Indian energy companies—including state major ONGC—is in early talks with Rosneft for the acquisition of a stake in the Russian state company’s massive Vostok oil project, the Economic Times reported, citing unnamed sources.

“Talks are at a very early stage and the companies are evaluating the project,” one of the sources said.

Meanwhile, Rosneft official reported it has been discussing the project with India’s oil minister Hardeep Singh Puri, who is currently visiting Russia.

The Vostok Oil mega project in Siberia, which includes the Vankor and Payakha clusters, has resources estimated at 44 billion barrels. All those clusters are close to the Northern Sea Route that Rosneft wants to use to ship oil to Europe and Asia.

The project will make up the backbone of Russia’s future oil production, tapping into 5 billion tons of oil to yield 50 million tons by 2024 and 100 million tons by the end of the decade. The development of Vostok Oil over its lifetime is estimated at some $170 billion.

Because of the massive cost of Vostok Oil’s development, Rosneft has been looking for foreign partners. Commodity trading major Trafigura said last December that it had acquired a 10-percent stake in the project, getting access to high-quality crude oil resources from a major new onshore oil-producing region in Siberia’s Taymyr province.

India is one of the more obvious choices when it comes to investment partners. Dependent on oil imports for about 80 percent of its oil consumption and unlikely to swiftly move away from oil to renewable electricity and hydrogen, India has been seeking ways to secure the future supply of the commodity.

Earlier this year, Indian media reported the country was in talks to invest between $2 and $3 billion in Russian oil and gas assets, including in the Arctic.

Russian bank funds lion’s share of Trafigura’s $7B Rosneft oil deal

By JACK FARCHY AND ANDY HOFFMAN on 1/5/2021

(Bloomberg) --Trafigura Group’s purchase of a stake in Rosneft PJSC’s flagship Arctic oil project was funded by a $7 billion loan organized by a Russian bank, according to documents that shed new light on the trading house’s biggest-ever deal.

The two companies last week said they had completed a deal for a 10% stake in Vostok Oil, without providing a value. Trafigura had said the purchase had been “majority financed by long-term debt,” but didn’t name the lenders.

According to corporate filings in Singapore, which haven’t previously been reported, the trading firm agreed to a 5.775 billion-euro ($7 billion) loan facility with Credit Bank of Moscow PJSC on Dec. 23.

The documents offer the first official indication of the scale of Trafigura’s bet on the sprawling project, which Rosneft Chief Executive Officer Igor Sechin has said could produce 1 million barrels of oil a day by 2027. The investment runs counter to the reluctance among many Western majors and investors to back big new oil projects, especially in environmentally fragile areas like the Arctic.

In addition to the loan for a fully owned Trafigura entity CB Enterprises Pte Ltd., through which it bought the stake, the trading house invested a small amount of its own funds, according to a person familiar with the transaction, who asked not to be named discussing sensitive information.

That implies that the deal was worth more than $7 billion -- making it Trafigura’s largest ever acquisition by far -- and valuing the 10% stake in Vostok Oil at roughly the same level as the book value of Trafigura itself. It also suggests a valuation of $70 billion for the whole project -- at the upper end of most analysts’ estimates, and more than Rosneft’s entire market capitalization of $62 billion.

A Rosneft spokesman said that the deal was “a logical extension” of its cooperation with Trafigura and would give the trading house “long-term access to high quality hydrocarbons to be produced with a low-carbon footprint that can be shipped both to the west and east.”

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Russia's Rosneft says India firms agree deal to join Vostok Oil project

Reuters February 05, 2020

Russia's state oil giant Rosneft has agreed a deal in principle for Indian companies to join the Vostok Oil project in the Russian Arctic, it said on Wednesday.

In order to negotiate the terms of Indian companies' entering Vostok Oil in the shortest time possible the parties agreed to create a regular working group of representatives of Russian and Indian companies, the statement said.

Rosneft added that it had signed a contract with Indian Oil Corporation Limited to supply up to 2 million tonnes of oil to India via the port of Novorossiisk by the end of 2020.

Vostok Oil: Rosneft Starts Works On Vankor Field

26 January 2021

Igor Sechin announced his grandiose plan to develop the Russian Far North to Vladimir Putin and all signs are now that he is under major pressure to forge ahead with the project. The Rosneft-developed Vostok Oil project should already produce 30 million tons of oil in just three years. But the construction work does not move forward as planned.

Rosneft has placed a tender on engineering services in the North Siberian Vankor area. The winning company is expected to draft project documentation on the building of mooring points on the western and eastern sides of river Yenisey and the development of a reserve pipeline to existing pipe infrastructure in the area. A Transneft-managed pipeline is now running to the Vankor fields, with crude oil flowing southbound before hitting the Transneft network. With a new pipeline built by Rosneft, oil volumes will be redirected northwards to the Taymyr region and its ports. Transneft could then lose up to 4 percent of its annual turnover. The Vankor deposits produce some 11 million tons of oil per year. Sechin has little time left as by 2024, the Vostok project is expected to bring 30 million tons of oil shipments on the Northern Sea Route, making it all possible. But Putin has a bigger appetite than just that. The Vostok Oil will be fundamental for Putin’s desired 80 million tons of shipments on the Northern Sea Route by 2024, a target included in the President’s so-called May Decrees from 2018.

The Vostok Oil project is one of Russia’s flagship oil projects. About 100 drilling rigs will be erected on the Taymyr peninsula and a 770 km long oil pipeline will bring oil volumes to the Sever terminal on the coast of the Kara Sea. Already in 2025, at least 30 million tons of oil are to be extracted. In 2027, production will amount to 50 million tons, and in 2030 – as much as 115 million. The Vostok project covers fifteen production areas in the Taymyr region such as the Vankor and oil-rich Payakha clusters. Rosneft expects the operation to cost $170 billion over a decade. It will also create fifteen new industrial settlements and build 800 km of new pipelines. Rosneft is also constructing the new Zvezda shipyard tasked with building at least twelve ice-class super oil tankers able to navigate in harsh Arctic weather conditions.

Rosneft holds talks with global traders, India and China on Vostok Oil project

Vladimir Soldatkin 12 feb 2021

Rosneft has held talks with international traders as well as big global oil consumers such as India and China about their possible participation in its massive Vostok Oil project, the Russian energy giant said on Friday.

Vostok Oil is one of Russia's biggest oil projects, comparable in size with the exploration of West Siberia in the 1970s or the U.S. Bakken oil province over the past decade.

Reuters reported last month that Rosneft was courting investments from global trading houses to help develop Vostok Oil after trading house Trafigura secured a 10% stake in the project. read more

Rosneft said it sold the stake to Trafigura for 7 billion euros ($8.5 billion) in the project, which is expected to start shipping oil via the Northern Sea Route in the Arctic in 2024.

Didier Casimiro, Rosneft's first vice president, told a conference call with investors that the company has been in the discussions with international traders and consumers. He did not identify the traders.

Another company manager said that Vostok Oil could become the world's largest producer of liquefied natural gas with annual output of around 50 million tonnes at around 2030.

In terms of oil, Rosneft has previously estimated Vostok's resources at 44 billion barrels, enough to supply the world for more than a year. It has said that, later this decade, it could produce 1% of global oil at a price competitive with Middle Eastern producers.

Vostok Oil: vers une nouvelle province pétrolière et gazière russe dans l’Arctique ?

Publié le : 27/11/2020 RFI Claire Fages

La compagnie pétrolière russe Rosneft vient d’annoncer le lancement des opérations d’exploration dans l’Arctique. La concrétisation du méga-projet Vostok Oil qui vise à produire près de 2 millions de barils par jour. La région est stratégique pour Moscou, près de la nouvelle route maritime du Nord.

Le géant russe du pétrole Rosneft vient de donner le top départ à Vostok Oil. Un méga-projet d’exploration d’hydrocarbures, dans l’Arctique, et plus précisément dans la péninsule de Taïmyr, le point le plus au nord de la Sibérie centrale, au-delà de la région de Krasnoyarsk.

Quelque 200 000 barils par jour de pétrole et de condensats issus du gaz devraient être extraits d’ici trois ou quatre ans dans cette région encore majoritairement envahie par les glaces, mais beaucoup plus, à terme, annonce Rosneft : 1,96 million de barils, soit plus que la production à plein régime de la Libye.

Dix tankers brise-glace, cent plateformes adaptées

Dix tankers brise-glace ont été commandés au constructeur naval Zvezda, contrôlé par Rosneft, ainsi qu’une centaine de plateformes pétrolière adaptées au milieu arctique pour réaliser des milliers de forages d’exploration et développer des puits. A terme, deux aéroports et une quinzaine de villes nouvelles devraient voir le jour. La péninsule de Taïmyr devrait selon Rosneft devenir une « nouvelle province pétrolière et gazière ».

La conquête de l’Arctique reste une priorité de Moscou
« La Russie est certes un Etat engagé envers l'Accord de Paris sur le climat, rappelle Francis Perrin, chercheur associé au Policy Center for the New South (PCNS, Rabat) et directeur de recherche à l'IRIS (Paris), mais les autorités russes n'ont jamais indiqué qu'elles n'allaient plus investir dans l'Arctique. A leurs yeux, la fonte des glaces ouvre de nouvelles perspectives industrielles et maritimes pour les ressources de l'Arctique ».

Le long de la nouvelle route maritime du Nord, qui avec le réchauffement climatique, est de plus en plus praticable. Une voie qui pourrait bientôt transporter beaucoup d’hydrocarbures russes à la fois vers l’Europe et surtout vers l’Asie, qui sera la région où la demande de pétrole va rebondir le plus fort.

La Russie vise le rebond de la demande pétrolière en Asie
Rosneft, bras pétrolier du Kremlin même si c’est une compagnie privée, voit au-delà de crise actuelle des prix du pétrole. « A terme, souligne Jean-Pierre Favennec, professeur à l’IFP-School, en 2025-2030, la demande de pétrole sera soutenue, et il y a aujourd’hui peu de projets » puisque les compagnies pétrolières occidentales ont renoncé à investir dans l’Arctique pour des raisons de réputation environnementale ou pour réduire les coûts.

Pour abaisser la facture de Vostok Oil, 130 milliards de dollars tout de même, Rosneft a obtenu de substantiels avantages fiscaux du Kremlin. Le négociant Trafigura s’est également dit prêt à investir à hauteur de 10% dans le projet.

Vers un nouveau port pétrolier dans l’Arctique russe

Publié le 15/05/2020

La compagnie étatique russe Rosneft a lancé son projet d’exploitation d’hydrocarbures Vostok oil en débutant le forage d’un puits d’exploration, a annoncé le 12 mai son patron Igor Setchine au président russe Vladimir Poutine. Elle prévoit d’accompagner ce projet de la création d’un port pétrolier dans l’Arctique.

Russia's Rosneft says India firms agree deal to join Vostok Oil project

MOSCOW (Reuters) 5 February 2020

Russia’s state oil giant Rosneft (ROSN.MM) has agreed a deal in principle for Indian companies to join the Vostok Oil project in the Russian Arctic, it said on Wednesday.

In order to negotiate the terms of Indian companies’ entering Vostok Oil in the shortest time possible the parties agreed to create a regular working group of representatives of Russian and Indian companies, the statement said.

Rosneft’s chief executive Igor Sechin has met with representatives from Mitsubishi Corporation, Mitsui & Co, Itochu Corporation, Inpex Corporation, Japan Petroleum Exploration (JAPEX), and Marubeni, to seek Japanese funding for the Vostok oil project, according to Reuters’s sources.

Two of those sources told Reuters that the Russian oil giant would seek Japanese investors to finance between 10 percent and 40 percent of the project, which Rosneft plans in a joint venture with Independent Petroleum Company (IPC).

In October, Russia’s deputy energy minister Pavel Sorokin said that the Vostok oil project - which would include not only field development but also pipelines, roads, and port infrastructure - is set to cost US$157 billion (10 trillion Russian rubles).
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Russian Oil Giant Prepares Massive $157 Billion Arctic Oil Project

By Irina Slav - Oct 28, 2019

Rosneft is preparing to lead an Arctic oil field development project that will cost an estimated $157 billion (10 trillion rubles).

Reuters quoted Russia’s Deputy Energy Minister Pavel Sorokin as announcing the price tag of the Vostok Oil project to media last week, adding that the Kremlin had already agreed on a tax relief package that would help with the Artic oil and gas push.

The Vostok Oil project will include already producing fields as well as untapped ones, and Rosneft will develop them along with partner Independent Petroleum Company. The tax relief for this project alone could reach some $940 million (60 billion rubles) annually, the chief of the tax department of Russia’s Finance Ministry said.

The tax relief package for the energy industry has been the subject of heated debate in political circles because at the same time that the Kremlin is lending its generous support for oil and gas, it is hiking other taxes, on citizens, and extending the retirement age as part of a delayed and highly unpopular retirement system reform.

Yet the Vostok Oil project could add some 2 million bpd to Russia’s overall oil production, which although not the biggest contributor to federal GDP is still the biggest single contributor to export revenues, at 53.8 percent.

The government’s tax relief would certainly go a long way towards helping Rosneft and its partner develop the Arctic fields, but it will not be enough on its own. To bring the plans to fruition, Rosneft would need foreign partners as well. And it has already found them: Indian and Chinese investors have already agreed to invest in Vostok Oil in exchange for minority stakes in the fields that the project includes. Some of them had put forward as a condition for the investment the agreement of a government support package and now that this has been largely agreed, the project could move forward.

By Irina Slav for Oilprice.com

The last frontier in Russia: Taimyr Peninsula
19 6月 2017

In the spring of 2017, BP, Rosneft and LUKOIL began drilling expensive exploration wells on the Taimyr Peninsula. The remote region in the Russian north attracts attention with a resource potential of 5 billion boe and a geology similar to that of the prolific West Siberian basin.

But with every step further east, the Taimyr Peninsula becomes more remote. In the Khatanga Bay area, exploration wells can cost up to US$200 million, and exporting oil from new discoveries will be a challenge.

Russian Energy Ministry assesses Vostok Oil project at 10 trillion rubles

28 October 2019

Investments in the Vostok Oil project in the new oil and gas province in Taimyr may reach 10 trillion rubles, Deputy Energy Minister Pavel Sorokin told the media.

"A few words about the new oil and gas province: the Payakhskoye field is the core element. Preliminary work has been completed there, with seismic research, exploration drilling and reserves evaluation finished… But we will need to create a ramified infrastructure to deliver oil to the client and to boost our joint project with BP, Yermak Neftegaz. This includes building service bases, roads and intrafield pipelines. From there, it will be necessary for us to build a northward pipeline and a port in Severnaya Bay, so that oil can be shipped via the Northern Sea Route," Sorokin said.

"All of this is on paper so far. The investment will be huge, if all of the forecasts are confirmed. Spending is estimated at 10 trillion rubles, including slightly more than 5 trillion to be spent on drilling and the rest on the infrastructure and field development. Of course, expenses will be smaller if the current forecasts are not confirmed, or if the project takes longer than initially planned. But still, the infrastructure will cost us trillions of rubles. These 10 trillion rubles are the whole of Vostok Oil," the deputy minister added.

Vostok Oil is developing the reserves of the largest fields in the Vankor cluster (Vankorskoye, Suzunskoye, Tagulskoye and Lodochnoye), as well as perspective oilfields located in the north of the Krasnoyarsk Territory, such as the Payakhskaya group (owned by Eduard Khudainatov's Neftegazholding) and the Zapadno-Irkinsky block. This oil can be transported via the Northern Sea Route.