The IX International Forum

Arctic: today and the future

December 05-07, 2019, St.Petersburg


Rosneft intends to load the Northern Sea Route with raw materials from its fields


Rosneft intends to load the Northern Sea Route with raw materials from its fields

The Kommersant Daily learned that Rosneft decided to make a significant contribution in growing of the Northern Sea Route shipping and might redirect oil there from the Vankor oil fields after building a 600-km-long pipeline to the coast of the Taymyr Peninsula. The company wants to connect this project with the development of the Payakha field by Eduard Khudainatov and his Neftegazholding. The government is working out this concept right now, but there is still no comprehensive assessment of the necessary investments. Transneft, being under the danger of oil pumping volumes drop, declared their readiness to "compete with the new direction". Experts consider that Payakha field will have more chances for implementation after involvement of Rosneft lobbying resource.

Eduard Khudainatov, President of the Neftegazholding, and Alexey Likhachov, the head of the Rosatom appealed to Maxim Akimov, Deputy Prime-Minister, with the request to assess the practicability of creating common oil delivery infrastructure for the Payakha field and the Vankor field for additional loading of the Northern Sea Route, the Kommersant daily sources reported. According to their information, Khudainatov and Likhachov point to the risks of failure of the President’s instructions to provide the Northern Sea Route cargo base with 80 million tons of cargo by 2024.  In this regard, it is proposed to redirect oil from new Vankor oil fields (Suzunskoe, Tagulskoe, Lodochnoe) to the north, with resources of 1.9 billion tons, reserves of 500 million tons and planned production of 22–24 million tons per year.  It was discussed the idea of building of 600-km-long pipeline from the Vankor field to the coast of Taymyr Peninsula. This oil pipeline will have a capacity of 25 million tons with the possibility of in
creasing to 50 million tons and will pass through the Payakha field owned by the Neftegazholding.

Rosneft, Neftegazholding and Rosatom didn’t want to give comments. But our source of “Kommersant” in “Rosatom” says that the position of the state corporation is simple – the more projects in the Arctic, the greater the cargo turnover and the need for nuclear icebreakers. The ministries could not comment the proposal. Meanwhile, the development of Payakha and the “single Arctic route of oil transportation” in the Taimyr area were mentioned at the meeting of governmental working group on the development of the Northern Sea Route headed by Maxim Akimov on February 25. The report on behalf of Neftegazholding was made by the Vice-President of Rosneft Andrey Shishkin who also supervises the Zvezda shipyard in the Far East.    

These fields are already connected to the Transneft system, and if the flows are transferred to the north, Transneft’s pipes may become half empty, given that the key Vankor field has already entered a stage of production decline. Meanwhile, the concept should help the development of Payakha - the only one major mining asset burdened by NGH debts. Payakha assets entered the company of Edward Hudainatov in 2013 and became one of the first acquisitions after he left Rosneft. Payakha and Geoteks were purchased, according to Kommersant, for 500 million dollars.

At the end of 2017 Eduard Khudainatov estimated the development of Payakha at 6 billion dollars. They couldn’t afford such investments, the company tried to find investors and in 2015 it requested 78 billion rubles from National Welfare Fund, but there was no result. In addition to problems with financing and lack of infrastructure in the region, the NGH’s plans to reach 10 million tons of production at Payakha by 2024 were doubtful, given that now only 163.1 million tons of oil was on balance. However, according to the words of one of Kommersant interlocutors, within a couple of months Payakha’s reserves may be increased to 500–600 million tons by the results of geological exploration. Another interlocutor of “Kommersant” specifies that it will be difficult to get governmental support without confirmation of reserves’ volumes.

Neftegazholding development plans for Payakha are already the part of the Northern Sea Route federal project of a comprehensive development plan for the trunk infrastructure. Now Edward Hudaynatov asks the parliament building to include in it the Vankor cluster as well. According to the one of the latest versions of the project data sheet, 81 billion rubles have been allocated for the development of the sea terminal in the North Bay for the oil export from Payakha (from extrabudgetary investment). The companies don’t provide any general assessment of the project cost. In addition to the pipeline and export terminal, they will also need ice-class tankers. In 2017, Rosnefteflot ordered the construction of ten Arc7 ice-class tankers to transport oil from Payakha, but it won’t be enough to transport 20 million tons per year.

According to the data of Kommersant, Neftegazholding and Rosneft are going to ship 20 million tons of oil through the Taymyr terminal in the North Bay the oil pipeline built from scratch, by 2024.  Part of it is supposed to be sent by tankers to the east through the Bering Strait. The companies expect that the total production at these projects could reach 50–55 million tons in 2035. Kommersant interlocutors emphasize that even if Neftegazholding can’t produce the planned 10 million tons, this volume can be replenished by oil from Vankor field.

One of the sources of Kommersant claims that transportation from Vankor to the NSR, taking into account the use of ice-class tankers, is cheaper than alternative route of the Transneft system through the port of Kozmino in the Far East.

He explained that Rosneft had no obligations to the pipeline company in terms of the amount of oil delivered. «It means that we will compete with new direction», — he said. Demin said that Rosneft was going to put 22.4 million tons in the Zapolyarye-Purpe pipeline in 2019 and 28.1 million tons by 2023. Two more sources of Kommersant consider the implementation and the timing of the project is doubtful. In their opinion, the Transneft system is cheaper than using NSR for "a few dollars per barrel”.

Director of the consulting center "Gecon" Mikhail Grigoriev notes that the idea is not new: a similar route to Dikson was discussed for the oil export from the Vankor project, but as a result, the configuration had changed.  The expert believes that Paykha field can provide 5 million tons of oil per year by 2024, while Vankor field can provide 25 million tons per year additionally.  «Given that other companies are ready to provide 58 million tons per year in the Northern Sea Route, redirecting the oil of the Vankor cluster to the north will make it possible to achieve a cargo volume of 80 million tons»,— he says. In addition, such cooperation of companies can give impetus to the development of Payakha, considering the financial and lobbying resource of Rosneft. In his opinion, it is possible to construct the oil pipeline and port infrastructure by 2024, if the work will be simultaneously conducted on the Tagul-Payakha and Payakha-North Bay pipe sections, and the government will support the project.

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