Page 5 - FSUOGM Week 50 2022

FSUOGM COMMENTARY FSUOGM

The biggest hit to spending will happen at Europe before the war with Ukraine and are
greenfields, according to Rystad, because of now estimated to take longer to come on stream,
the sharp drop in approvals. Investment in new Yamal is still positioned to be the next largest
Russian projects are forecast to drop by 40% gas hub for the country in the coming years,”
from last year, to only $8bn. Russia greenlit the Rystad said. Gazprom is still developing major
development of only 2bn barrels of oil equivalent fields such as the Bovanenkovskoye group and
(boe) of resources last year, and almost all of this Kharasaveyskoye and is building the infrastruc-
volume related to the Baltic LNG project. ture to connect the fields. Gas from the Yamal
“In light of Russia’s invasion of Ukraine, fields is predominantly used as feedstock for the
however, financing the project will be a struggle European market, but once the pipelines are in
for Gazprom,” Rystad said. “Service companies place, these volumes can be redirected towards
have already started leaving Russia, while Linde, Asia, opening the market to more Russian gas
which is providing its proprietary LNG technol- flows.
ogy for the project, has also exited the country.” Rosneft too is jacking up investments this
While no major projects are expected to be year, with the company’s capital spending climb-
signed off on next year, activity should pick up ing 14% in the first half year on year, and with
in 2024, with Gazprom’s anticipated approval the upstream accounting for about 90% of the
of the second stage of the Chayandinskoye gas total. Upstream investment alone is anticipated
and condensate field that supplies gas to China to reach $12.9bn in 2022, according to Rystad,
via the Power of Siberia. There should also be in line with last year’s $13.1bn. The Vostok Oil
progress at the Payakhskoye field, which forms project will swallow up 25-30% of that amount,
part of Rosneft’s Vostok Oil megaproject in the Rystad said.
Russian Arctic. “Rosneft is carrying out extensive drilling
Meanwhile, spending on brownfields is pre- activities in the area, appraising the deposits to
dicted to slide by only 14%, as Russian oil pro- confirm additional reserves,” Rystad said. “We
duction remains firm despite fallout from the expect a large portion of the capital investments
war. But weaker demand will result in a 20% to go toward the construction of project facili-
drop in brownfield investments in 2022, accord- ties. Excluding these costs, 2022 spending will
ing to Rystad, with Rosneft and Lukoil alone come in at around $9.5bn compared to $10.7bn
accounting for around 42% of the total. last year.”
Novatek’s priority prior to the war was on
Against the trend raising capital for Arctic LNG-2. The company
Gazprom is an outlier among Russian oil and had been aspiring to raise its LNG output from
gas majors, as in October it approved an up- the current 19mn tonnes per year to 40mn tpy
dated plan that would see capital expenditure by 2027, with the launch of Arctic LNG-2’s three
rise by 225% this year to $28.6bn. According trains and a fourth mini-train at Yamal LNG.
to Rystad, some $10.4bn of that sum would “However, this target is expected to take five
go to upstream projects, down slightly from to six years longer to achieve. The operator is
$11bn in 2021, with the majority of this year’s focused on bringing online the Arctic LNG-2
total being funnelled into gas and condensate Train 1, and work on the remaining trains has
reserves in the Russian Far East and on the been halted for now,” Rystad said. “The project
Yamal Peninsula. partners had secured financing for 57% of the
“Although some of these discoveries were total required investment of around $23bn by
intended as feedstock for gas deliveries to the end of 2021.” ™

Week 50 15•December•2022 www. NEWSBASE .com P5