Page 145 - RusRPTJan21

Zapadno-Irkinskoye) have 2P reserves of c960mn tons (7bn bbl)
· Oil quality in the Taimyr fields is high, with an API gravity of c40. With its own dedicated pipelines and port facilities on the Arctic coast, the project will be able to gain a c$10-$12/bbl premium to Urals grade crude (management estimate), and will be able to arbitrage Asian and European markets.
Rosneft​ has found a giant, 800bcm gas field in the Kara Sea. ​Interfax reports. The company is naming the field ‘Marshal Zhukov’. This follows reports from last week of 1.3tcm of gas found during the company’s summer drilling campaign in the Vikulkovskaya and Ragozinskaya structures, with the Zhukov field being the name now applied to the find in the first of those structures. These are not the hydrocarbons you are looking for: For most companies, 1.3tcm of gas discoveries would likely be considered solidly good news, given that this amount almost matches the entire proven reserves of Norway, for example (although comparing the equivalent of 3P reserves in this case to Norway’s 1P reserves is not strictly fair, it gives an idea of the scope of the finds). However, Rosneft was hoping to find giant oil fields rather than gas fields. Indeed, the company was likely hoping for more discoveries like the one it made in 2014 when it and then-partner ExxonMobil found the 950mn bbl and 420bcm Pobeda oil & gas field. Only with substantial liquids content could these finds be profitably developed inside of 10-15 years, and even that would likely require oil prices well north of $50/bbl. Rosneft still has dozens of promising structures in the region, and likely more oil will be found with time, but not this year.
The tax regime of​ ​Rosneft​’s Vostok Oil project may be altered by the Duma​. The tax regime may be altered to provide relief from oil export duties if the fields in question are moved to the Excess Profits Tax (EPT). According to Deputy Finance Minister Alexei Sazanov, this will equalize the tax treatment with that for other new regions in East Siberia (Krasnoyarsk, Yakutia, and Chukotka). Changes supportive of project economics. The bill in question has already been approved for the second of three readings, and as such appears relatively advanced. Given the company’s lobbying power, and the economic significant of the Vostok Oil project (Rosneft estimates it will at some point account for 2% of Russian GDP), we can only assume Rosneft itself is supportive of the changes, and that they will be positive for the economics of the project. As a reminder, Rosneft has already received substantial tax breaks on crude produced from its Vankor Cluster of fields – which are being rolled into the Vostok Oil project – to finance infrastructure construction for the project. Management recently described Vostok Oil, which is targeted to produce 2.3mmbpd by 2033, as a “transformational project” for Rosneft.
145 ​RUSSIA Country Report​ January 2021 www.intellinews.com