Page 10 - FSUOGM Week 01 2020

FSUOGM INVESTMENT FSUOGM
Equinor signs off on Siberian oil project
RUSSIA
The FID is the culmination of seven years of work.
NORWAY’S Equinor has sanctioned a new joint project with Russia’s national oil company (NOC) Rosneft in Western Siberia.
North-Komsomolskoye is a mature oilfield discovered in 1986 in Russia’s Yamalo-Nenets region. Equinor, then known as Statoil, agreed in 2013 to work with Rosneft to develop the field’s deeper PK1 layer and began pilot drilling.
The pair moved on to test production in 2018.
Equinor announced on December 23 it had taken a final investment decision (FID) with Rosneft on the project’s development. The move follows the Norwegian firm’s closure in January last year of the purchase of a 33.3% stake in the field’s operator, Sevkomneftegaz. Rosneft holds the remaining 67.7% equity.
“This is an important milestone in the joint project that we have been working on for seven years,” Equinor’s country manager for Russia, Elisabeth Kvalheim, said in a statement.
Rosneft has described North-Komsomol- skoye as having “complex geology associated with an oil rim of highly viscous oil.” While its resources are “difficult to extract,” the field is not subject to Western sanctions that bar companies from assisting Russia in shale oil, deepwater and
Arctic offshore projects.
Neither partner has disclosed the value of
the new investment, nor production forecasts for North-Komsomolskoye. But according to Equinor, the pair aim to recover 250mn barrels of oil and 23bn cubic metres of gas.
Rosneft’s data shows that the field produced 125,100 tonnes (10,100 barrels per day) of oil, 7,760 tonnes (767 bpd) of condensate and 43.7mn cubic metres of natural gas in the three months ending September 30.
Equinor has been active in Russia for more than 20 years, and agreed to work more closely with Rosneft at projects under a strategic pact in 2012. The partners also have a pilot project in Western Siberia to recover oil from lime- stone, which also is not subject to international sanctions.
The two companies also teamed up to drill wells in 2016 in the Sea of Okhotsk in the Russian Far East, but this venture ended in failure with no oil or gas found.
Several other Western majors are preparing to close new investment deals in Russia’s upstream – namely Royal Dutch Shell and Spain’s Repsol, which want to develop oil with Gazprom Neft.™
POLICY
Russia resumes oil flows to Belarus after 4-day stoppage
BELARUS
The issue is only temporarily resolved.
RUSSIA restarted deliveries of oil to Belarus’ two refineries on January 4 after suspending them in the first week of the year after the two countries’ long-term supply contract expired. The resump- tion of trade came after Russia granted new price concessions to Belarus, according to reports.
Belarus and Russia are entrenched in a pro- tracted dispute over oil and gas supplies, even while the pair continued talks on forming a sin- gle union state.
“Today at 17:05 pumping units have already been switched on and oil is being delivered to the Naftan [oil refinery],” the deputy chairman of Belarus’ national refining group Belneftekhim, Vladimir Sisov, was cited as saying by the local BelTA news agency.
Supplies were halted on New Year’s Eve for a total of four days. Production at the Naftan plant at Belarus’ other refinery, Mozyr, was subsequently cut to a technical minimum and petroleum product sales abroad temporarily ceased.
Minsk and Moscow were negotiating a new oil supply deal all last year to replace the one that
expired on December 31. The talks have been particularly fraught as changes to Russian oil taxation have jacked up the price Minsk pays for supplies.
It is understood that the renewal of supplies is only temporary, potentially for one month only, giving the two sides more time to thrash out a new longer-term contract.
Under its so-called tax manoeuvre, Russia has imposed more tax on production while reducing export levies. This has hurt Belarus, which receives export duty-free Russian oil as a de-facto subsidy for its refining sector, a major part of its economy. Minsk has asked for billions of dollars of compensation, but Moscow has refused.
Parallel to oil supply talks, Belarus and Russia have also been trying to agree on a price of Rus- sian gas for this year. Again, only a temporary solution was found. Russia agreed to continue supplying Belarus with gas at the same price as last year of $127 per 1,000 cubic metres, but only in January and February, the Belarusian Energy Ministry told TASS.™
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