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Despite the external challenges, progress is being made. In the first half of this year, two more exploration wells were drilled, and three more are in the process. Eight more will be drilled in the appraisal stage, as the expert of the Infotek analytical centre Valery Andrianov notes. As part of the pilot development of the Payakh cluster, 27,000 metres were drilled and eight production wells were completed. In July 2023, the company began pilot development of the Baikalovskoye field as well as the construction of the Vankor-Payakha-North Bay oil pipeline, necessary to deliver the oil to the sea. 200 km of the 770 km of pipe has been laid.
According to Ronald Smith, senior analyst at BCS Global Markets, “the project will be financed primarily via free cash flow from Rosneft’s existing portfolio, although originally, the plan called for selling some minority shares in the project, which was partly successful, but obviously that is no longer possible.” Commodity traders Trafigura, Vitol and Mercantile & Maritime all signed up to join the project, only to withdraw in the months after Moscow launched its invasion of Ukraine.
“Initial production, which should start in about a year, will likely be modest due to OPEC+ constraints. However, over time it is expected to grow significantly to [0.5mn bpd] or more even if the output constraints remain in place, with Vostok Oil slowly being prioritised vs. other existing Rosneft projects,” Smith told NewsBase. “And if the OPEC+ limits are lifted, the forecasts are 1mn bpd by the early 2030s if not sooner.” Rosneft sold a near 50% stake in Vankorneft, the developer of the Vankor fields, to several Indian companies for RUB227bn ($2.6bn) in 2016. Since the war started, India has emerged as the biggest importer of Russian oil. Whether or not those same Indian companies will commit to invest in the grander Vankor Oil project is another matter, especially considering sanctions.
2.7 The making of the new budget
On November 17, Russia’s State Duma approved the final version of its national budget bill for the next three years (2024–2026). Five days later, the plan was approved by the Federation Council. When Vladimir Putin signs the bill into law, it will mark the first time in modern Russian history that a budget has designated more money to the military than to social spending.
At 10.7 trillion rubles ($120.8bn), expenditures on “national defence” make up a third of all spending outlined in the budget, while social spending receives 7.5 trillion rubles ($84.7bn), though the latter amount also included some military-related expenditures such as medical care for injured soldiers. Russian Finance Minister Anton Siluanov has defended the bill as necessary to “ensure victory.” Meduza explains how the budget’s final draft differs from the original version, how objections to the militarization of national spending fell on deaf ears, and why Russian businesses should expect an increase in their own tax burden.
By the second reading of Russia’s next national budget bill, State Duma deputies and officials had introduced over 900 amendments, 768 of which
17 RUSSIA Country Report December 2023 www.intellinews.com