Page 7 - FSUOGM Week 13

FSUOGM COMMENTARY FSUOGM
Sidestepping sanctions
Rosneft spokesman Mikhail Leontiyev told Reuters that the company’s exit from Venezuela was aimed at protecting its shareholders.
“We defended the interests of our sharehold- ers and did it in an effective way,” he told Reuters. “And to whom the risks go is not an issue for us. Themainthingisthattherisksareleavingus.”
Rosneft has been under US sanctions since 2014, in retaliation for Moscow’s annexation of Crimea from Ukraine. The existing sanctions restrict the company’s access to international financing, and the equipment, technology and expertise needed to exploit challenging oil and gas projects in Russia. But they do not affect the day-to-day operations of the company.
Washington’s latest sanctions on Rosneft are yet to kick in, with the US Treasury setting a May 20 deadline for the affected subsidiaries to wind down their Venezuelan trading operations. But the measures have already had an impact, with China’s state-run Sinochem Group reportedly refusing to buy oil from Rosneft in mid-March because of the risk that the sanctions would come into force.
By transferring its Venezuelan business to another Russian state company, Rosneft is hop- ing that Washington will not follow through with its threat. The US Treasury has said it will “consider lifting sanctions for those who take concrete, meaningful and verifiable actions to support democratic order in Venezuela.”
“Now it is our right to expect the fulfilment of the promises that were made publicly by Amer- ican regulators,” a company representative told Reuters.
At the same time, Russia will be able to con- tinue supporting the Maduro regime without exposing its top oil producer to US retaliation. Instead,thegovernmentwilltakeongreaterrisk itself. Doing so is precarious, at a time when the US is reportedly considering sanctions against Russia to force it to cut production, in order to raise oil prices and support struggling US shale producers. Russia and Saudi Arabia have both announced plans to ramp up oil supplies follow- ing the collapse of the OPEC+ pact on output restrictions.
If Rosneftegaz has indeed ceded its stake in Rosneft, this also means that for the first time, the Russian state no longer has a majority share of the oil producer.
Rosneft’s joint ventures in Venezuela include Petromonagas, Petroperija, Boqueron, Petro- miranda and Petrovictoria. The largest of these is Petromonagas, which is 40%-owned by Rosneft and controls a field in the Orinoco oil belt and a heavy crude upgrader near the Jose oil terminal in northeastern Venezuela. The company lifted 79,000 barrels per day (bpd) of oil on March 27, according to a PDVSA document seen by Reu- ters, accounting for 10% of the country’s total output. It is unclear how these operations will be affected by the transfer.™
PIPELINES & TRANSPORT
Workers at major Russian gas field isolated after COVID-19 exposure
RUSSIA
The field is a major source of supply for the European market.
RUSSIA’S Gazprom has isolated 20 workers at the supergiant Bovanenkovo gas field in the Arc- tic, after they came into contact with someone with the coronavirus (COVID-19).
The contact took place on March 16 during the flight from Moscow to Yekaterinburg, Gaz- prom’s local subsidiary said in a statement. The affected workers arrived at Bovanenkovo on another plane the following day, and have been quarantined until March 30. Two have shown symptoms of acute respiratory viral infec- tion, Russia’s RIA Novosti has reported, citing regional medical authorities.
Russia has largely been spared the escalating spread of the coronavirus pandemic in the rest of Europe, according to official numbers, with only 840 cases and three deaths so far confirmed.
Gazprom and other Russian producers have limited personnel travel and extended shifts at remote fields. The gas firm on March 27 said that one of its employees had tested positive for
the coronavirus after falling ill while on holiday within Russia, without disclosing where he was stationed.
Bovanenkovo, located on the Yamal Penin- sula, is one of Russia’s largest gas fields with an estimated 4.9tn cubic metres of gas in reserves. Its output is currently working up to 115bn cubic metres per year under a third-phase expansion project. Most of this gas is pumped to Europe via the Yamal-Europe and Nord Stream pipelines.™
The Bovanenkovo gas field. Source: Gazprom.
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