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project of its liquefied natural gas (LNG) terminal Baltic LNG on the Baltic Sea port of Ust-Luga, now planning a gas liquefaction facility along with gas processing plant. The annual revenues of the upgraded project are estimated at $4bn. Gazprom plans to tackle it in joint venture with RusGazDobicha. According to the Vedomosti daily, the company used to be 100% controlled by stoligarch and childhood friend of President Vladimir Putin Arcady Rotenberg. Together Gazprom and RusGazDobicha plan to process 45bn cubic meters of gas, to obtain 13mn tonnes of LNG, up to 4mn tonnes of ethane and about 2.2mn tonnes of liquefied hydrocarbon gases. Notably, the Dutch-British energy major Shell is no longer mentioned in the investment proposal of Gazprom, although since 2015 the company was the only partner of natural gas giant on Baltic LNG. Shell is heavily beating on the LNG and the gas- chemical upstream assets, Dmitry Marinchenko of Fitch Ratings reminded Vedomosti daily on March 30, while warning that Gazprom would face challenges realising the project on its own. Analysts surveyed by Kommersant daily believe that Shell pulling out of the Baltic LNG would considerably lower the chances of raising the financing, while noting that RusGazDobicha has yet to realise any large-scale project and is unlikely to inspire investors. In such scenario, Gazprom would have to tap into its investment programme to cover missing funds.
● Rosneft
The President Vladimir Putin is requested to support a creation of Arctic hydrocarbon extraction cluster by the "Oil Tsar" Igor Sechin, the head of Russia's largest oil producer Rosneft and long-time ally of President Vladimir Putin, the Kremlin press-service said on April 1. Since the Western sanctions limited the exports of extraction technology and complicated joint ventures with foreign energy majors, discussions are ongoing whether Russia's largest companies will be able to maintain stable long-term oil output with Siberian brownfields alone, without tapping into challenging Arctic offshore fields.
About 60% of all Russian energy resources are concentrated in the Arctic regions, Energy Minister Alexander Novak previously estimated in 2017. In 2018 Rosneft has announced that it discovered its more oilfields in the eastern Arctic region. The potential cluster eyed by Rosneft would produce up to 100mn tonnes of hydrocarbon by 2030, and would ensure up to 80mn tonnes of transportation flow on Russia's Northern Sea Route. Analysts surveyed by Vedomosti and Kommersant dailies note that the transportation question is key in the proposal, as it would require to re-route many of the existing pipeline oil transportation solution to the developing Northern Sea Route. Rosneft has another interest in Arctic sea transportation, as it controls Russia's largest icebreaker shipyard Zvezda. Currently Zvezda has about 25 vessels ordered, but needs about 160 vessels to break even, Sechin told Putin. Previous reports indicated that Rosneft and Neftegazholding might participate in the project to construct a crude oil pipeline from the Russian Vankor oil field cluster to North Bay at Taymyr through the Payakha group of fields.
Rosneft plans to set up an Arctic production hub with output potential of up to 100 mtpa (2mn bpd) by 2030, CEO Igor Sechin stated at a meeting with President Vladimir Putin. The hub could include existing projects (mainly the Vankor hub) and all Arctic exploration projects, including in the Taymyr area. The Vankor hub, which is already producing and has production potential above 25 mtpa, all other projects are in the early exploration stage. However, Rosneft has said it wants to be more involved in developing the Northern Sea Route, for which Putin has set a volume transportation target of 80 mtpa of cargo. We think that both Rosneft's exploration and infrastructure development
108 RUSSIA Country Report May 2019 www.intellinews.com