Russia Monitor is a review of the most important events related to Russian internal and external security, as well as its foreign policies.
Date: 19 November 2020
Rosneft and Gazprom Neft Let Foreign Investors Enter Arctic Projects
Russian oil firms are desperate for money – and even more technology – to exploit oil-rich deposits in the country’s Far North, a situation that pushes them to look for foreign partners to invest in Arctic mining projects. Recent days brought such moves from two of Russia’s largest energy companies: Rosneft and Gazprom Neft.
The former energy giant chose to whom it would sell shares in its Vostok Oil project. Although Russia’s biggest oil company has long been in talks with India and Britain’s BP, it decided to sign the deal with Singapore-based oil trader Trafigura for its Arctic project. On November 16, Rosneft’s board of directors approved its inclusion in the project to buy a ten percent stake in the venture. It also got the green light from Russia’s government commission for control over foreign investments. The price for the acquisition is not disclosed. As the whole project is valued at between $70 and $100 billion, this is probably no less than $7 billion. Yet the deal with the Singaporean company does not put an end to talks on the Vostok Oil investments with other potential investors – such as India’s ONGC and Britain’s BP. It is a joint project of Rosneft and some private structures owned by Eduard Khudainatov, a former boss of the Russian oil giant. It comprises six hydrocarbon fields of a total size of 37 billion barrels of oil equivalent.
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In turn, Gazprom Neft sold its Yenisei project shares in the Gydan Peninsula to the British-Dutch oil consortium Royal Dutch Shell. More precisely, the Russian company sold a 50 percent share in Gazprom Neft-Aero Briansk, its subsidiary holding a formal license to exploit resources in the project. The shares were bought by Shell Exploration and Production West-Siberia BV. The Yenisei project consists of two license blocks: Leskinsky and Pukhutsyayakhsky. Gazprom Neft teamed with Shell to set up a joint venture to explore the fields. Both companies inked a preliminary deal in July 2020 while the closing of the transaction is scheduled by the end of this year. The Leskinsky license block is located in the Taymyr district of the Krasnoyarsk Krai. Its hydrocarbon resources may exceed 100 million tons of oil equivalent. Adjoining the Leskinsky block is the Pukhutsyayakhsky block – located in the Tazovsky district of the Yamal-Nenets Autonomous Okrug. Its resources are estimated at around 35 million tons of oil equivalent.
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