Page 10 - FSUOGM Week 36 2019

FSUOGM PIPELINES & TRANSPORT FSUOGM
Sakhalin-1 partners take decision on LNG plant
RUSSIA
It is unclear whether the Rosneft head was referring to a formal FID.
RUSSIA’S Rosneft and its partners at the Sakha- lin-1 oil and gas venture have taken a decision on building an LNG export plant, the company’s head Igor Sechin has said.
Sakhalin-1 operates three oilfields off the east coast of Sakhalin Island that also contain size- able but undeveloped gas resources. Rosneft is joined at the project by US major ExxonMobil, Japan’s Sodeco and India’s ONGC Videsh Ltd (OVL).
“This year, shareholders made a decision to build our own LNG plant in De Kastri,” Sechin was quoted as saying at the Eastern Economic Forum in Vladivostok in a company statement.
It is unclear whether the Rosneft head was referring to an official final investment decision (FID) having been taken.
De Kastri, a port on the shore of Khabarovsk on the Russian mainland, is already the site of an export terminal for Sakhalin-1’s oil. According to Sechin, the single-train LNG terminal would have a 6.2mn tonne per year (tpy) capacity and
could supply super-chilled gas to Japan.
“Its products will be much in demand in Japan due to the geographical proximity of the
two countries,” he said.
Rosneft has long sought to establish itself as
an LNG producer, joining its domestic com- petitors Gazprom and Novatek, the respective operators of the Yamal LNG and Sakhalin-2 liquefaction terminals. The Sakhalin-1 part- ners have discussed the development of their own plant for years, but progress stalled amid concerns that there was not enough gas to make the plan feasible. Rosneft also looked at selling Sakhalin-1’s gas to Gazprom instead, to support a third Sakhalin-2 train, but the pair were unable to agree on a price for supplies.
Early designs for the De Kastri plant were completed last year, and Exxon’s Sakhalin subsidiary Exxon Neftegaz estimates its cost at $6.9bn. A further $1.6bn in upstream and $1.3bn in midstream investments would also be required.™
Belarus threatens to buy non-Russian oil amid crisis in Moscow talks
BELARUS
Russian oil taxation changes have driven up the cost of Belarus’ imports.
BELARUSIAN President Alexander Lukashenko has pledged “to flood” the nation’s oil pipelines with non-Russian oil amid a grow- ing crisis over Moscow’s changes to oil industry taxation.
Russia’s so-called tax manoeuvre has driven up the cost of oil for Belarus, weakening its refin- ing margins.
“If you [Russia] bend us [the Belarusian lead- ership], the oil price is close to the market one now, the customs duty has been replaced with the tax manoeuvre,” state news agency BELTA quoted Lukashenko as saying on September 6. “But does Russia need its market flooded with 20-25 million tonnes of someone else’s oil – American oil, Saudi Arabian oil [...]?”
The president added that Minsk could import Azeri oil via Ukraine to Mozyr Oil Refinery, situ- ated in Southern Belarus.
Belarus faces a new economic crisis if Minsk fails to secure full compensation from Russia for losses triggered by the latter’s tax manoeu- vre. According to the Belarusian Finance Min- istry, the country’s budget revenue losses from the manoeuvre in 2019 alone were estimated at
BYN600mn($300mn),andthatthelossesmight total $2bn by the end of 2024.
However, in December 2018, Lukashenko’s spokesperson said in a televised interview that Minsk already lost $3.6bn. Due to Moscow’s tax reforms Belarus will lose extra $11bn within the next four years, the spokesperson added.
The tax manoeuvre shifts the tax burden from export duty on oil and petroleum products to mineral extraction tax (MET) on oil production. It envisages a gradual reduction in the rate of export duty on oil and petroleum products from 30% to zero in the period from 2019 to 2024 and a proportionate increase in MET.
Lukashenko added that Mink “is also work- ing on a northern route”. “I’ve said it plainly to Russian authorities. Both via Poland and via Bal- tic states. Some headway has been made. But if we start importing oil via Poland, we will need two lines of the Druzhba pipeline, which is used to export Russian oil,” he said.
“Does Russia need it? No. Let’s negotiate like human beings then and make things bet- ter. These are my requirements,” the president said.™
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w w w . N E W S B A S E . c o m Week 36 11•September•2019