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The continent’s LNG imports soared in 2019, Russia’s offshore Arctic zone is thought to
as higher production capacity in the US and contain many billions of barrels of oil, along with
elsewhere drove down prices. This encouraged trillions of cubic metres of gas. But the region’s
increased consumption, but also gave traders an remoteness and harsh operational conditions
incentive to store more volumes. make development extremely costly. The well
Towards the end of last year companies that found Pobeda cost around $700mn, mak-
also expanded their stocks in anticipation of a ing it the most expensive ever drilled in modern
potential disruption to Russian gas supplies via Russia.
Ukraine. This disruption was averted as Moscow There are also doubts about whether Rosneft
and Kyiv were able to agree an 11th-hour deal has the expertise to carry out Arctic offshore
covering continued transit in 2020. Besides the drilling effectively without a foreign partner such
pandemic, milder weather earlier this year also as Exxon.
weighed down on demand. In other news, Gazprom Neft has reported its
UK producer Premier Oil unveiled a plan second-quarter results, with both EBITDA and
last week to settle some of its debts and allevi- net income arriving in line with expectations.
ate shareholder concerns about the state of its But investors were disappointed by the compa-
finances. ny’s negative free cash flow (FCF) of $1.1bn.
The company is seeking to raise $530mn Gazprom Neft has also announced the launch
from its investors as part of a $2.9bn refinancing of the next phase of the Novoportovskoye oilfield
move. It also wants to raise a further $230mn to in the Arctic – one of its main greenfield projects.
fund its takeover of some of BP’s oilfields in the The company is now drilling for oil at the field’s
North Sea. northern section, in order to keep output stable.
Novoportovskoye is expected to flow 160,000
If you’d like to read more about the key events shaping barrels per day (bpd) of crude in 2021. Rosneft revealed
Europe’s oil and gas sector then please click here for
NewsBase’s EurOil Monitor. If you’d like to read more about the key events shaping last week that it
the former Soviet Union’s oil and gas sector then was drilling two
FSU: Rosneft returns to Arctic offshore please click here for NewsBase’s FSU Monitor .
Given low prices and the unpredictable market more wells in the
outlook, it is somewhat surprising that Rosneft More grief for Gorgon LNG
has chosen this moment to resume costly drilling LNG projects in different parts of the world – Kara Sea
in the offshore Arctic. and at different stages of development – have
In a meeting with Russian President Vladimir suffered setbacks in recent days.
Putin, Rosneft CEO Igor Sechin revealed last Significantly, Chevron has confirmed spec-
week that the company was drilling two more ulation that it will need to shut Trains 1 and 3
wells in the Kara Sea. These sites are not far from at its Gorgon LNG project in Australia in order
where Rosneft and ExxonMobil made the 2014 to carry out maintenance. This comes as Train
Pobeda oil discovery, estimated to exceed 900mn 2 remains offline for repairs after weld quality
barrels in size. issues were found on propane heat exchangers,
Exxon was forced to exit the project because prompting fears that the other trains may also
of US sanctions against Russia, and all work was be affected.
halted. Rosneft’s decision to resume drilling on However, the 15.6mn tonne per year (tpy)
the shelf is oddly timed. Like its peers across the Gorgon project will not need to be taken offline
world, the company has been forced to make altogether at any point, after Western Australia’s
deep spending cuts in response to the coronavi- Department of Mines, Industry Regulation and
rus (COVID-19) pandemic and resulting price Safety approved Chevron’s plan to stagger the
collapse. shutdown of the trains.

P8 www. NEWSBASE .com Week 34 26•August•2020