Page 16 - FSUOGM Week 49

FSUOGM POLICY FSUOGM

Duma committee approves

more Vostok Oil tax breaks

RUSSIA THE budget and tax committee of the State Rosneft is seeking to buy out Neftegazholding
Duma, Russia’s lower house of parliament, has at the Paiyakhsaya fields, sources told RBC on
Rosneft recently said approved an amendment that exempts projects December 1.
it would sell some on the Taymyr Peninsula from having to pay Some of the Vankor fields are already in pro-
marginal assets to help duty on oil exports. duction, flowing more than 400,000 bpd. Rosneft
fund Vostok Oil. The amendment has been made to a law also recently agreed on the sale of a 10% stake
adopted in October aimed at supporting oil in Vostok Oil to commodity trader Trafigura,
production in the remote Arctic region, which providing additional cash flow. Despite this and
already passed a first reading at the Duma. Law- the tax breaks it has secured, Rosneft also plans
makers are set to consider it in a second reading to sell brownfield assets in southern Russia and
on December 8. elsewhere in order to ‘high-grade’ its overall
The break on export duty will primarily asset base, its management said. “We see this
benefit Rosneft and its Vostok Oil megaproject, as an important development in the company’s
consisting of a cluster of oilfields on Taymyr history: historically, Rosneft’s management team
estimated to contain 6bn tonnes (44bn barrels) has been far more focused on acquisition than
in proven, probable and possible oil reserves, optimisation,” BCS Global Markets (BCS GM)
according to Rosneft. The company has pro- commented on December 1.
jected that the fields could yield some 2mn bar- Rosneft’s comments are a “significant and
rels per day (bpd) at full capacity. positive news event, clarifying and solidifying
Rosneft is betting big on Vostok Oil, recently investors’ growth expectations for the company,”
announcing it would sell a number of its mar- BCS GM continued. “The news of asset divest-
ginal assets in order to fund the $100bn venture. ment marks a new phase for the company, which
Rosneft’s management told analysts on a con- has tended only to acquire assets over the last
ference call on December 1 that Vostok Oil was decade.”
a “transformational project.” It comprises the Vostok Oil will have dedicated pipelines and
Vankor fields and other Rosneft assets in Russia’s port facilities on the Arctic coast and is strate-
far north, including those operated by its Ermak gically placed between Asian and European oil
Neftegaz joint venture with BP. It also includes markets. Traditionally most of Russia’s oil has
the Paiyakhskaya field group, operated by a pri- headed westwards because of the way its pipeline
vate firm called Neftegazholding. Neftegazhold- system has been built. Rosneft’s management
ing is owned by a former Rosneft president, estimates that the project will sell its crude at a
Eduard Khudainatov. $10-12 per barrel premium. ™

P16 www. NEWSBASE .com Week 49 09•December•2020