![]() ![]() ![]() But those sanctions were nowhere near as severe as the current restrictions, only forbidding Western companies from providing goods, services and financing to certain Russian offshore and unconventional projects. ![]() Russia’s drive to localise these products and services was launched in 2014 after the West first began imposing sanctions on the country, and has yielded limited results. Rosneft has also lost access to Western oil and gas equipment, services and technology that it depended on for challenging and capital-intensive projects in the past. Western banks have closed their doors to the financing of Russian oil and gas, and even financiers in so-called “friendly” countries like India and China have shown reluctance to commit to new projects in the country, despite the opportunities that the withdrawal plans of Western oil majors present, through fear of falling foul of sanctions, as well as the general uncertainty. Nevertheless, the odds are against Rosneft that it will be able to find anywhere near the investment it needs to see Vostok Oil through to completion in the near term. For their part, Vitol and Mercantile & Maritime have been silent on their plans at Vostok Oil for the time being. And on June 10, the trader said it had completely written down its initial €1.5bn ($1.6bn) investment in the project. Rosneft also reached out to investors in Asia, but no deals emerged.ĭays after Moscow launched its invasion of Ukraine, however, Trafigura said it was putting its shareholding in Vostok Oil up for review. Traders were a natural choice of partner, as they could leverage their vast trading networks to find a market for Vostok Oil’s supply. It went on to sell a further 5% to a 75:25 joint venture between trading groups Vitoil and Mercantile & Maritime. In December 2020 it closed the sale of a 10% interest in Vostok Oil to Trafigura, with the global commodities trader purportedly securing a $7bn Russian loan to finance the deal. Realising it could not foot this bill on its own, Rosneft reached out to international investors. This is not to mention the 6,500 or so wells that will need to be drilled to bring its oil out of the ground. ![]() A huge seaport would need to be constructed to handle its exports, along with some 800 km of new pipelines, 2,000 MW of power generation capacity, 3,500 km of new power lines, two airports and various other infrastructure. The infrastructure requirements for Vostok Oil are staggering. In February last year, Rosneft CEO Igor Sechin told Russian President Vladimir Putin that Vostok Oil would cost as much as $160bn to implement. Yet the project’s remote location, thousands of kilometres from existing infrastructure, always meant it was not going to be an easy undertaking. The company claims this is enough to support 2mn barrels per day (bpd) of oil production, and up to 50mn tonnes per year (tpy) of LNG. Vostok Oil comprises a cluster of large fields in Russia’s north Krasnoyarsk region, holding a combined 6bn tonnes (44bn barrels) of oil and substantial gas resources, according to Rosneft. With Russia’s Urals blend now branded as toxic, and the EU targeting a 90% embargo on Russian oil imports by the end of 2022, the pressing question is what Russia can do to find new markets for its existing production, let alone for additional barrels in the future. Now, over three months into Russia’s war in Ukraine, Vostok Oil’s prospects have dramatically dimmed. A year ago, Rosneft’s Vostok Oil megaproject in the Arctic was heralded as the next frontier for Russia’s oil industry, comparable in scope to the development of the Western Siberian oil basin in the 1970s and the Bakken tight oil formation in the US over the past decade. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |