Page 17 - FSUOGM Week 46

FSUOGM PROJECTS & COMPANIES FSUOGM

Rosneft announces sale of 10% in

Vostok Oil venture to Trafigura

RUSSIA RUSSIAN state oil giant Rosneft announced on The project will require the construction of
November 17 that its board had approved the thousands of kilometres of pipelines and other
sale of a 10% stake in the company’s Vostok Oil infrastructure, with its oil expected to be shipped
megaproject in the Arctic to global commodities from a new marine terminal to Asia via the
trader Trafigura. Northern Sea Route.
The deal, the value of which was undisclosed, Rosneft has been looking for partners to bring
will land Trafigura an interest in a cluster of fields on board at Vostok Oil for some time, in order
estimated by Rosneft to hold 6bn tonnes (44bn to share some of its $31bn cost. It has previously
barrels) of oil and condensate resources. Rosneft courted investors from India and other Asian
has previously estimated that the project could markets likely to receive the project’s exports.
supply up to 25mn tonnes per year (500,000 bar- The deal with Trafigura, a close partner of
rels per day) of oil to global markets by 2024, ris- Rosneft that handles a significant share of the
ing to 1mn bpd by 2027 and 2.3mn bpd by 2030. company’s seaborne oil exports, comes as the
It is also weighing up options to produce LNG Russian producer is set to receive new tax breaks
from the site. at the Vankor field. The breaks were announced
Vostok Oil comprises the Vankor, Suzun- as part of a recent overhaul of Russian oil taxa-
skoye, Tagulskoye and Lodochnoye oilfields tion, in which many producers saw their tax bur-
and other Rosneft assets in Russia’s far north, den increase but Rosneft mostly came out on top.
including those operated by its Ermak Neftegaz The tax breaks will enable the company to
joint venture with BP. Also included is the Pai- cross-subsidise the expense of bringing some of
yakhskaya field group, operated by a private firm Vostok Oil’s other, undeveloped fields into pro-
called Neftegazholding. duction. ™

NEWS IN BRIEF

RUSSIA horizon are necessary to soften the negative November 12, welcoming the increase in
impact on the oil sector from the tax reform. both prices and volumes in September from
Russian oil majors to lose duties have been revised in Russia over 30 the low base set in 2Q20, which was the
The analysts remind that MET and export
worst export revenue quarter for Gazprom
$8.4bn on new tax regime times in the period of 2002-2018, with the in over 15 years.
tax burden rising from 39% to 61% of the
Current European spot prices are in the
Russian oil companies would lose about cost of a barrel in 2018. range of about $190 per mcm, although
RUB650bn ($8.4bn) in 2021-2025 due to the BCS GM believes that Gazprom’s oil-
oil and gas sector taxation reform, Vygon linked contracts, which have built-in 6-9
Consulting estimates in an industry report. Gazprom sees European month lags, will likely keep the company
As reported by bne IntelliNews, Russian from realising the full price gains, at least
lawmakers have approved a major overhaul exports, prices rise further immediately.
of oil industry taxation, aimed at extracting BCS GM analysts believe that Gazprom
more budget revenues from the sector and Russian natural gas giant Gazprom has is on track for an overall fall in exports this
simplifying the fiscal landscape. continued to improve the dynamics of its year of circa 15%, "from 192bn cubic metres
Producers have been stripped of breaks gas exports to Europe, posting only a 3% to perhaps 162 bcm".
on mineral extraction tax (MET) and export year-on-year decline in 3Q20, as compared Previously Sberbank CIB analysts gave a
duty under the reforms, and the government with a 19% y/y decline in 1H20, according more bullish outlook on Gazprom's exports.
is encouraging them to transfer affected to Interfax. Should gas export volumes in November-
fields to a uniform excess profit tax (EPT) Earlier this week Interfax reported that December be no lower than the average
system instead. the average price of Gazprom’s European level for the last three years (at 37.4 bcm),
Vygon estimates that oil companies would exports rose from $93 per million cubic it would put Gazprom's non-CIS export
lose about RUB1.15 trillion of cash flow as a metres to $123 per mcm, roughly in line volumes above 180 bcm, or 6% above the
result, with about RUB500bn of netbacks and with prevailing European spot prices in that upper end of the guidance range provided
tax breaks making a total loss of RUB650bn. month. by the head of Gazprom's export unit most
The analysts warn that the federal budget As reported by bne IntelliNews, recently (165-170 bcm), they estimated.
would not automatically cash in all of Gazprom has recently maintained its
the extra revenues, as clipped cash flows dividend policy, as the past months' sales
would revise the investment programmes have picked up. The company also recently Gazprom seeks gas price
downwards and eventually hurt output, said it expects a positive cash flow in 2021.
synergies and spillovers to other industries. "Gazprom’s export business is finally hike from Poland’s PGNiG
Vygon believes that fiscal guarantees turning the corner after a horrid start to the
for investment projects with 7- to 20-year year," BCS Global Markets commented on Russian gas giant Gazprom has requested

Week 46 18•November•2020 www. NEWSBASE .com P17