Page 8 - FSUOGM Week 14 2022

FSUOGM COMMENTARY FSUOGM

OIES weighs up impact of Western

oil firms' exit from Russia

Russian oil and LNG prospects now look dimmer, as IOCs announce
their departure or commit to no new investments

RUSSIA RUSSIAN oil and gas production is unlikely to going in the absence of any major problems.”
be affected significantly in the short term by the However, the institute notes that there is a risk
WHAT: departure of Western oil majors, but their exit of outages given the departure of one of the most
Many IOCs are intending could have an impact on long-term growth, the experienced international oil companies in the
to leave Russia. OIES has said in a report. LNG sector, and Shell may be removing some
BP, Equinor, ExxonMobil and Shell have all key technical equipment and software, which
WHY: announced plans to leave Russia, although it could undermine medium-term efficiency and
They have done so remains to be seen how quickly they will be able optimisation. It also seems unlikely Gazprom
because of pressure over to find buyers for their equity positions. Others will realise its long-standing plan to develop a
Moscow's invasion of like OMV, TotalEnergies and Wintershall Dea third liquefaction train at the site, or develop any
Ukraine. are remaining, but have pledged not to commit new LNG projects.
to any new investments in the country. Russia’s other major LNG project is Yamal
WHAT NEXT: As far as gas pipeline supply is concerned, LNG, which is run by Novatek, a company
Short term, Russian oil the companies’ exit will have little impact on the that “has demonstrated its huge competence in
and gas production is simple gas fields that deliver supplies to Europe, operating major projects over the past five years.”
unlikely to be affected, as Gazprom is capable of maintaining produc- What is more, its Western partner in the project,
but in the long term, the tion at these sites on its own, the OIES said. A TotalEnergies, has not left.
story is different. greater risk relates to the EU’s plan to reduce This said, the fate of Arctic LNG-2 is less
Russian gas supply by as much as two thirds by clear, as TotalEnergies has said it will not invest
the end of this year. any further in the project, due online in 2023.
As for Russian LNG, the situation is “slightly The first train is already 80% complete, but the
more nuanced,” the OIES said. prospects for the second and third trains “look a
“Shell is withdrawing from the Sakhalin-2 little murkier,” the OIES said.
project and the major shareholder, Gazprom, “Finance could be found in Asia and per-
has limited experience of the LNG sector,” the haps the Middle East, but at the very least some
OIES said. “However, it has been a major part- delay in the development timetable might be
ner for the past 14 years and so will undoubtedly expected,” the OIES said, noting that Novatek’s
have acquired adequate skills to keep production goal of producing 55-70mn tonnes per year

P8 www. NEWSBASE .com Week 14 06•April•2022