Page 12 - FSUOGM Week 20 2021

FSUOGM PROJECTS & COMPANIES FSUOGM

Rosneft eyes Vostok Oil

partner deal by year-end

RUSSIA ROSNEFT expects to bring on board another it sold a 10% stake in the venture to Swiss trader
partner at its flagship Vostok Oil project in the Trafigura. According to a Kommersant report
Rosneft sold a 10% Russian Arctic by the end of this year, company that month, Rosneft has also invited Indian com-
stake in the venture to vice-president Didier Casimiro said in an earn- panies ONGC Videsh Ltd (OVL), Oil India and
Trafigura in December. ings call on May 14. Indian Oil and Bharat Petroresources to join the
“We are negotiating with a number of parties. project. The group already has a 49.9% interest in
And by the end of the year, perhaps even faster, the Vankor oilfield that will play a role in Vostok
we will have informed the market that another Oil.
party will join Vostok Oil,” the executive was Rosneft said it expects to launch a pilot devel-
quoted as saying by Interfax. opment programme at Vostok Oil as early as
Vostok Oil is a megaproject on the Taymyr next year at the Lodochnoye oilfield, a satellite of
Peninsula consisting of 13 fields and 52 licence Vankor. It has also carried out seismic surveys at
areas estimated to hold some 6bn tonnes (44bn the Zapadno-Irkinsky licence area and wants to
barrels) of liquid hydrocarbon reserves and start exploration drilling there in 2022.
large amounts of natural gas. Rosneft CEO Igor In a shift in strategy towards rationalisation,
Sechin has suggested that the project could one Rosneft has been divesting weaker-performing
day produce in excess of 2mn barrels per day assets in Russia and overseas to fund Vostok Oil’s
(bpd) of oil and as much as 50mn tonnes per year expense. It recently agreed to sell its interests in
(tpy) of LNG. two offshore projects in Vietnam and a related
Rosneft is eager to attract partners to help gas and condensate pipeline to Russia’s state-
share Vostok Oil’s cost. In December last year, owned Zarubezhneft. ™
NEWS IN BRIEF

exchange rate remains at current levels, BCS Experts say that for technical reasons some
RUSSIA GM analysts estimate. of the oilfields that have been idled will not
Sova Capital maintained a Buy rating be easy to bring back into production and
Russian oil dinosaur Surgut on SurgutNG’s ordinary and preferred might have to be written off.
Not so, says Russia’s Natural Resources
shares, but the analysts see a risk of
grows cash pile to $50bn in SurgutNG underperforming "if there are Minister Alexander Kozlov, who claimed
no meaningful changes in its corporate
last week that Russia has enough extractable
1Q21 governance or if the ruble weakens oil still in the ground to maintain
significantly".
production for another 59 years and gas
Russian natural gas major SurgutNefteGas Previously in April 2021 shares of reserves that can be exploited for another
(Surgut or SurgutNG) reported $2.4bn SurgutNG jumped on no appreciable 103 years.
in net income under Russian Accounting news flows, and investors could have “Availability of all oil reserves with
Standards (RAS) for 1Q21, down by 75% anticipated a declaration and cancellation existing production stands at 59 years given
year on year, with revenues of $5.25bn, up of the company’s ‘phantom’ treasury shares. the current production level, and for natural
by 35% y/y, and its cash position growing to In 2020 rumours that SurgutNG could gas it is 103 years,” Kozlov said as cited by
a record-high $50bn. dismantle its treasury holdings also caused RBC on May 11. “But we understand that
As followed by bne IntelliNews, a temporary rally of its shares. this is only a general balance. There are
SurgutNG is the Russian oil sector's fields that are being unlocked, while there
"dinosaur" known for its ultra-conservative are fields that are yet to reach full load.
financial policies, basing operations only in Russia’s oil and gas Anyway, we have to improve geological
rubles, and its $50bn-odd cash pile, which exploration, including exploration
is almost as much as Russia’s sovereign reserves will last for in remote areas. We have the goal of
reserves. loading the Northern Sea Route [NSR],
"Results were slightly light at the another 59 and 103 years hydrocarbons will become its basis.”
net income line, but cash generation Most of Russia’s oil production is
outperformed as SurgutNG’s legendary respectively, says natural concentrated, and has been since Soviet
cash pile rose over $50bn for the first times, in west Siberia, but east Siberia, that
time," BCS Global Markets commented on resources minister has a very similar geography and is believe
May 17, while affirming a Hold rating on to hold significant unexploited reserves,
SurgutNG's shares, seeing them as "a dark- There has been some talk of Russia having remains underdeveloped.
horse favourite". passed “peak oil” in the last two years after More recently Russia has also begun to
As the company's cash generation output fell from an all-time high of 11.2mn explore and exploit the Arctic region that is
remains strong, net income is on track for barrels per day to 10.4mn bpd in April also thought to hold even more reserves and
10% dividend yield (DY), assuming the thanks to the OPEC+ production cuts deal. is becoming increasingly accessible thanks

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