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The company is asking for benefits for the Far US LNG exports rebound despite setbacks
East Petroleum Co. (FEPCO) venture, including US LNG exports are reported to be on track to
negative excise duties – effectively subsidies – for rise for a second consecutive month in Septem-
the naphtha and crude oil feedstock that the pro- ber, as the spate of cargo cancellations that hit US
ject will consume. terminals over the summer slows down.
Rosneft had been trying to advance the Gas prices in both Asia and Europe rose by
project for a decade before quietly shelving it over 60% in August, and while they still remain
last year. The company failed to find invest- comparatively depressed, they have helped the
ment partners and had difficulty working out a LNG trade to pick up.
means of supplying the complex with raw mate- This comes after US LNG exports had
rials. Under its first stage, priced at RUB700bn fallen each month between March and July, as
($9.3bn), FEPCO is slated to process up 12mn the coronavirus (COVID-19) pandemic hit
tonnes per year (240,000 bpd) of crude oil demand, prompting a number of buyers to can-
and produce 8mn tpy of gasoline, diesel and cel contracted cargoes. Exports of US LNG fell
other refined fuels, along with 3.4mn tpy of to a 21-month low of 3.1bn cubic feet (87.8mn
petrochemicals. cubic metres) per day in July, and proceeded
Its output would double under a second to rebound to 3.7 bcf (104.8 mcm) in August.
stage, which would bring overall costs to RUB1.5 According to federal data, they are expected to
trillion. rise further to 3.8 bcf (107.6 mcm) per day in
Meanwhile, Rosneft is also pushing ahead September.
with a hard-to-recover oil project in the Vol- This comes despite some recent setbacks,
ga-Urals Basin – its first without any partner. The including both Cheniere Energy’s Sabine Pass
company said on September 10 it had started terminal and Sempra Energy’s Cameron LNG
drilling a first well to test the Domanik formation facility being taken offline ahead of Hurricane
in the Orenburg region. Laura making landfall in the region. Sabine Pass
Rosneft’s close partner and shareholder BP – the largest LNG export terminal in the US –
had wanted to take part in the project, but pulled was reported last week to have loaded its first
out after the 2014 oil price crash. cargo since going offline. However, Cameron
Western sanctions were also imposed on LNG remains offline, and a utility warned last
Russia’s oil sector that year, but they have only week that transmission lines damaged by Hur-
prevented firms from assisting at shale reser- ricane Laura, which resulted in power supply to
voirs rather than limestone formations such as the terminal being cut, would take an extended
Domanik. period to repair. The facility is reported to have
Rosneft has been assessing the potential for deferred cargo loadings scheduled for Septem-
commercial production at Domanik sites in the ber to October.
Samara region as well, through a joint venture Exports from other terminals that were not
with Norway’s Equinor. The company typi- affected by the storm are also reported to be on
cally partners with international oil companies the rise. This includes the Corpus Christi LNG
(IOCs) at technically challenging or significantly and Freeport LNG plants in Texas, as well as the
costly projects. Elba Island terminal in Georgia.

If you’d like to read more about the key events shaping If you’d like to read more about the key events shaping
the former Soviet Union’s oil and gas sector then the global LNG sector then please click here for
please click here for NewsBase’s FSU Monitor. NewsBase’s GLNG Monitor.

P10 www. NEWSBASE .com Week 37 17•September•2020