Page 5 - FSUOGM Week 11 2022

FSUOGM COMMENTARY FSUOGM

Platform stationed at
the Sakhalin-1 project.

Now with Russia facing unprecedented iso- Udmurtia region, where output totalled 120,000
lation from the international community, its barrels per day last year, up from 100,000 bpd in
dependence on China as both a political and 2020. Rystad expects the project to enter decline
economic ally will only grow. in the mid-2020s. Rosneft is also partnered with
Russia has been steadily expanding its eco- Beijing Gas at the Verkhnechonskneftegaz pro-
nomic and political ties with China over the ject. Beijing Gas has a 20% interest there, where
past decade, and energy trade has played a overall oil and associated gas production hit
major role in this shift. Since the development 150,000 boepd in 2021.
of the Eastern Siberia – Pacific Ocean (ESPO) Rystad also sees potential for Indian inves-
pipeline over a decade ago, Russia has emerged tors to expand their interests in Russia. ONGC
as one of China’s biggest oil suppliers, often jos- Videsh Ltd (OVL) has a stake in the Sakhalin-1
tling with Saudi Arabia for the top spot. Russia’s project, which ExxonMobil is leaving. OVL is
LNG terminals also ship gas to China, as in late also an investor in Rosneft’s Vankor field along-
2019, Gazprom launched sales to the country via side Oil India, Indian Oil and Bharat PetroRe-
the 55bn cubic metre per year Power of Siberia sources. Oil India, Indian and Bharat also have
pipeline. When Putin was in Beijing, Gazprom an interest in the Taas-Yuryakh project, which
and China’s CNPC agreed a second deal for an BP is withdrawing from.
additional 10 bcm per year of pipeline gas supply Yet while sanctions imposed in 2014 did
via the Far East. not deter Chinese and Indian investors from
Chinese investors have also built up a large expanding in Russia, Rystad cautions that this
position in Russia’s upstream, LNG and petro- time around circumstances are different.
chemicals sectors. China is the largest investor “It will take some time before accurate assess-
in Novatek-operated LNG projects. CNPC and ments of all the risks associated with investments
Silk Road Fund own 20% and 9.9% stakes in in Russia can be made,” Rystad says, noting it
Novatek’s 17mn tpy Yamal LNG plant, where does not “expect any immediate reaction from
TotalEnergies is also a shareholder. CNPC also Asian companies to offers of stakes in Russian
has a 10% interest in Novatek’s 20mn tpy Arc- companies.”
tic LNG-2, due on stream in 2023, and a further “Once a clearer picture emerges, however,
10% is held by China’s CNOOC. These positions there could be a significant spike in M&A activ-
guarantee China 4mn tpy of LNG supply. ity in Russia, with Asian players potentially
Meanwhile, China’s Sinopec is a 47.4% part- replacing majors in key projects,” the consul-
ner in Rosneft’s Udmurtneft project in Russia’s tancy says. ™

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