Rosneft Begins Arctic Oil Terminal Construction
Russia’s oil giant Rosneft on Tuesday said it had launched construction works on an oil terminal for its Vostok Oil project in the Arctic, expecting the port to become the country’s biggest oil terminal by the end of this decade.
Vostok Oil, in Russia’s Far East, comprises several groups of oil fields holding an estimated 44 billion barrels of oil. Initial work on the project began in January 2021. The total cost of its development has been estimated at $170 billion over the lifetime of the fields. The Vostok Oil project in Russia’s Far North is close to the Northern Sea Route that Rosneft wants to use to ship oil to Asia.
Rosneft has also started drilling at the Payyakhskoye field, part of the massive Vostok Oil, the project’s chief executive Vladimir Chernov told Russian media on Tuesday. Rosneft expects oil to start flowing from the field in 2024, and the project Vostok Oil to deliver crude via the Northern Sea Route by 2027, Chernov was quoted as saying.
Western analysts, however, doubt that Rosneft will be able to keep the timeline for the massive project’s development as Western sanctions are depriving Russia and its state-owned oil and gas firms of access to capital and technology.
Last year, Rosneft was looking to attract some of the world’s largest oil trading houses to the Vostok Oil project, offering them to become investors in exchange for oil supply contracts.
This year, investors are abandoning Russian projects after Putin invaded Ukraine. One of those major traders, Trafigura, said earlier this month that it had exited its 10-percent non-operational passive shareholding in Vostok Oil, selling the stake to a Hong Kong-registered trading company for an undisclosed price.
The Western sanctions, which ban exports of technology for oil and gas to Russia, will also affect the timeline of the Vostok Oil development, analysts say.
The Payyakhskoye field, at which Rosneft started drilling today, could see first production by 2029 instead of in 2024, the Russian giant says, according to research firm Rystad Energy.
“Any delays in one part of the huge supply chain involved in the project will lead to the delay of the whole project,” Daria Melnik, senior analyst at Rystad Energy, told The Wall Street Journal earlier this month.
By Tsvetana Paraskova for Oilprice.com
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