Page 11 - FSUOGM Week 50 2019

FSUOGM PROJECTS & COMPANIES FSUOGM
Rosneft lands rights to trio of Arctic blocks
RUSSIA
The company paid $97mn for the licences after a fierce contest with Surgutneftegaz.
RUSSIA’S Rosneft has added more acreage to its Arctic portfolio, acquiring exploration rights to three more blocks on Russia’s northern Taymyr Peninsula.
Rosneft outbid private rival Surgutneftegaz in a state auction for licences to the Yandoksky, Dzhangodsky and Mezeninsky areas, Interfax cited sources as saying on December 12. The plots collectively hold 7.4mn tonnes of oil and 73.6bn cubic metres of gas in D1+D2 resources.
The company paid RUB6.1bn ($97mn) for the permits, compared with an initial ask of only RUB20mn, suggesting that its competition with Surgutneftegaz was fierce.
The location of the three blocks has not been disclosed, although Rosneft may be seeking to build up its presence in Taymyr’s east, where the company is working with BP at the Baika- lovskoye oilfield.
Rosneft reportedly has plans to merge its operations in the area with those of independent producer Neftegazholding (NGH), whose flag- ship asset is the Paiyakhskoye oil deposit. Pai- yakhskoye is at an early phase of development, but NGH’s owner Eduard Khudainatov, a former
Rosneft executive, claims it could flow hundreds of thousands of barrels each day.
Rosneft is understood to have set up a sub- sidiary called Vostok Oil to manage the united assets, and wants to bring in foreign investment. Its CEO, Igor Sechin, reportedly met with Jap- anese government officials, as well as Japanese firms JOGMEC, Mitsubishi, Itochu, Marubeni, Mitsui and Inpex on December 11, offering them stakes in Vostok. Sechin intends to court investors in China and India as well.
Vostok’s assets are remote and will require the construction of lengthy pipelines, roads, a sea- port and other infrastructure to develop. Project costs could amount to RUB10tn ($157bn), Rus- sian Deputy Energy Minister Pavel Sorokin told reporters last month.
Analysts who have spoken with FSU OGM have questioned whether the venture can make a return, unless it receives generous tax breaks and other state support. Sechin has appealed to Pres- ident Vladimir Putin seeking just such backing.
Rosneft also won a licence at an auction in October for the West-Irkinsky block adjacent to Paiyakhskoye (See FSU OGM Week 42, 2019).™
Rosneft taking reins of JVs in Venezuela
VENEZUELA
The Venzuelan company has ceded more and more responsibility to Rosneft over recent years.
ROSNEFT, Russia’s largest oil producer, is reportedly taking the reins of several joint ventures it has set up with PdVSA, Venezuela’s national oil company (NOC).
Traditionally, PdVSA has taken the leading role in its partnerships with outside investors, including Rosneft. But sources familiar with the matter told Bloomberg last week that a subsid- iary of the state-owned Russian company had taken control of discussions with several of PdV- SA’s contractors – namely, local oilfield service providers.
The sources did not name any of these con- tractors, saying that the negotiations were still private. They indicated, though, that this was not PdVSA’s first step in this direction.
The Venezuelan company has ceded more and more responsibility to Rosneft over the last few years, largely because it lacks the resources needed to sustain many of its joint projects. It has lost many workers in recent years as Venezuela’s economy has deteriorated, and its own finances have suffered as a result of low oil prices and the US sanctions regime. In turn, its oil output has dropped to less than 800,000 barrels per day (bpd), down from more than 2.5mn bpd four years ago.
PdVSA’s troubles have driven many of its erstwhile partners away. Even China National
Petroleum Corp. (CNPC), which continued to do business with Caracas for quite some time after others stopped doing so, has reportedly halted or suspended work on joint projects.
Rosneft, by contrast, has been working more closely – and more extensively – with the Venezuelan NOC. On the downstream end, the Russian company has hired many former PdVSA employees to work at its office in Pan- ama, which now serves as the main hub for Venezuelan oil sales. Most of the crude traded by this office consists of production from Ros- neft’s five joint projects in Venezuela and liq- uids delivered as payment in kind for Russian loans to Venezuela.
On the upstream end, the state-owned firm has also said it wants three of its five joint ven- tures with PdVSA – Petromiranda, Petromona- gas and Petrovictoria – to raise output. These groups have been hit hard by US sanctions and by electricity shortages but are keen to improve performance, Bloomberg’s sources said. (The other two ventures, Petroperija and Boqueron, have not yet reached the production stage.)
Meanwhile, Rosneft has not confined itself to working with PdVSA. It has also taken con- trol of Precision Drilling de Venezuela, a ser- vice company formerly owned by Weatherford International. ™
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