Page 4 - FSUOGM Week 24 2022

COMMENTARY
FSUOGM COMMENT AR Y FSUOGM

Fate of Vostok Oil up in air amid

sanctions, EU embargo

Vostok Oil was touted as the next frontier for Russia’s oil industry, likened in scope to the

development of the Western Siberian basin in the 1970s.

RUSSIA A year ago, Rosneft’s Vostok Oil megaproject in combined 6bn tonnes (44bn barrels) of oil and
the Arctic was heralded as the next frontier for substantial gas resources, according to Rosneft.
WHAT: Russia’s oil industry, comparable in scope to the The company claims this is enough to support
Trafigura has pulled out development of the Western Siberian oil basin 2mn barrels per day (bpd) of oil production,
of the Vostok Oil project. in the 1970s and the Bakken tight oil formation and up to 50mn tonnes per year (tpy) of LNG.
in the US over the past decade. Now, over three Yet the project’s remote location, thousands of
WHY: months into Russia’s war in Ukraine, Vostok kilometres from existing infrastructure, always
The trader is scaling back Oil’s prospects have dramatically dimmed. With meant it was not going to be an easy undertak-
its operations in Russia. Russia’s Urals blend now branded as toxic, and ing. In February last year, Rosneft CEO Igor
the EU targeting a 90% embargo on Russian oil Sechin told Russian President Vladimir Putin
WHAT NEXT: imports by the end of 2022, the pressing question that Vostok Oil would cost as much as $160bn
Rosneft will struggle to is what Russia can do to find new markets for to implement.
secure the financing, its existing production, let alone for additional The infrastructure requirements for Vostok
expertise, technology and barrels in the future. Oil are staggering. A huge seaport would need
equipment it needs to Vostok Oil comprises a cluster of large fields to be constructed to handle its exports, along
realise the project. in Russia’s north Krasnoyarsk region, holding a with some 800 km of new pipelines, 2,000 MW

P4 www. NEWSBASE .com Week 24 15•June•2022