Page 12 - FSUOGM Week 03 2021

FSUOGM INVESTMENT FSUOGM

Rosneft eyes trading house funds

for Vostok Oil project

RUSSIA ROSNEFT is reportedly looking to tap invest- barrels of oil – enough to cover the entire world’s
ments from global trading houses to move ahead demand for a year. Company CEO Igor Sechin
Rosneft just closed a with its massive Vostok Oil project in the Russian has predicted it will flow 1mn barrels per day by
sale in the project in Arctic, sources told Reuters on January 15. 2027, rising to over 2mn bpd at a later stage.
Trafigura. Rosneft brought on board Singaporean com- Rosneft made a previous effort to find inves-
modity trader Trafigura last month as a partner tors in 2019, when Sechin journeyed to Japan,
for Vostok Oil with a 10% stake in the scheme, China and India for a roadshow with local inves-
which comprises several large-sized oilfields in tors. Like many Rosneft projects, Vostok Oil will
Russia’s far north. That deal was estimated to be deliver oil to Asia-Pacific markets, making it
worth $7bn, backed by a loan from a Russian rational for Rosneft to find investors from this
bank, putting Vostok Oil’s overall value at $70bn. region. It is partnered at the already-producing
Moscow-based Sova Capital assesses its worth at Vankor field, which forms part of Vostok Oil,
$64bn. with a group of Indian companies.
Rosneft is now in talks with Trafigura rivals
Vitol, Glencore and Gunvor, among others, to Risks
secure additional funds, according to Reuters. Vostok Oil’s cost is considerable, but its feasibil-
In return for investment, these traders will ity is difficult to determine, as it is unclear how
receive immediate contracts for crude oil and much exploration and appraisal work Rosneft
refined products, Reuters reported. For buying has undertaken at the site. Developing oil and
into the project, Trafigura was rewarded with gas fields in the Russian Arctic is always a chal-
a long-term contract for oil and products, the lenge, given their remoteness and the region’s
news agency said. The deal means Trafigura will harsh climatic conditions.
retain its status as the biggest exporter of Rosneft A considerable risk to Vostok Oil comes
goods for another five years. from possible US sanctions. Washington has
Reuters revealed last week that Gunvor had had sanctions imposed on the Russian oil sec-
won a contract to take 9mn tonnes (66mn bar- tor since Moscow’s 2014 Crimean invasion. But
rels) of Rosneft products, marking its first deal so far its restrictions on project participation
with the Russian major in eight years. But it is have only applied to offshore deepwater and
unclear whether that contract is connected with Arctic fields, as well as unconventional deposits
Vostok Oil. BP, a minority shareholder in Ros- onshore. Vostok Oil’s fields are all onshore and
neft, secured rights to 5mn tonnes of the com- conventional in nature.
pany’s fuel oil. However, restrictions could be strengthened
Trading houses typically avoid investing under a Joe Biden presidency. The new adminis-
directly in production, preferring offtake deals tration in the White House faces the first test in
whereby they provide loans to projects in its interactions with the Kremlin, after Russian
exchange for a share of their future supplies. opposition leader Alexei Navalny was detained
“Involving oil traders in the project makes on January 18 upon landing in Moscow. He was
sense, because they are essentially buying expo- previously in Germany undergoing treatment
sure on future oil supply,” a source told Reuters. for a poisoning attack, suspected to have been
Rosneft estimates Vostok Oil’s size at 44bn carried out by the Russian security services. ™

P12 www. NEWSBASE .com Week 03 20•January•2021