Mr. Igor Sechin, Deputy Premier with responsibility for oil and gas issues, in a government meeting on Tuesday said that offshore projects should be postponed until better times. –In the near future, the shelf will not have big perspectives, because here we are talking about serious capital investments, which will not pay off quickly with the current situation in the market, Sechin said, Gazeta.ru reports.
A few days before attending the 152nd session of OPEC, Igor Sechin also informed that the Russian government has decided not to give licenses to several strategic oil fields. Among them are the licenses to two oil fields in the Nenets Autonomous Okrug (the Trebs and Titov fields).
Rosneft interests
Mr. Sechin rather wants the Russian government to give a priority to the development of oil and gas fields oriented towards China and the Asian-Pacific region. This orientation must be seen in the light of the interests of the Rosneft company, which is eager to develop several oil fields in Eastern Siberia. This year Rosneft plans to invest about 98 billion RUB in the development of its eastern-Siberian projects.
Having a major part of its license portefolio in this region, Rosneft according to experts, have ended up in a complicated situation due to an enormous loan burden (over 20 billion USD) and a lack of own investments resources. In February this year Rosneft together with Transneft signed agreements with the Bank of Development of China which secures 25 billion USD of credits in exchange for long-term oil supplies from Russia to China. But even this amount might not be enough to cover the company’s debts and ensure progress in the company’s ambitious investment program.
Rosneft-Gazprom
At the same time, the Sechin statement is likely to be received with certain surprise in Gazprom, which owns 13 licenses to offshore projects in Russia. In the end of February the Gazprom Board of Directors put forward a plan to continue the work on the development of top-priority offshore fields: Prirazlomnoye oil field in 2011, Shtokman gas field in 2013 and Kirinskoye gas field in 2014. The latter field is a part of the Sakhalin-3 project and until recently also an object of claims from Rosneft. However, it was given by the government to Gazprom without a tender.
Shtokman implications
Gazprom has repeatedly announced that it is not going to cut its investments program for this year which has a 26 billion USD cost frame. Some experts nevertheless consider that the program can be cut with approximately four billion USD. In the light of the statements from Sechin it is not excluded that this could be made at the expense of Shtokman.
Anyhow, on Wednesday, March 18, the General Director of “Sevmorneftegas” company Mr. Alexander Mandel visited Severodvinsk where the Prirazlomnaya platform is under construction and announced that this project remains a priority for Gazprom. Mr. Mandel asked the management of Sevmash company not to slow down the tempo of construction. The Prirazlomnaya platform will cost 60 billion rubles.
Long-term consequences
The delay of offshore projects is unlikely to seriously influence the volume of hydrocarbons production in Russia but can cause a reduction of investments in geological investigation activity. This will definitely negatively influence the dynamics of oil and gas production in the future. In few years Russia will seriously experience a need for new fields and resources.
BarentsObserver Arkhangelsk
