Rosneft eyes Arctic gas hub in Pechora

Rosneft will joint efforts with Alltech in the Pechora LNG project, sources close to the deal say.

The oil company intends to build a LNG plant on the Pechora Sea coast, which could serve both land-based and offshore gas fields in the area.


The Rosneft engagement in the Pechora LNG comes after project owner Alltech for some time has tried to get on board the powerful state company. In a deal planned to be signed this week, Rosneft gets a 50+1 percent stake in a joint venture.

Rosneft will pay about $100 million for its stake in the project, a source close to the company says to newspaper Vedomosti

As previously reported, Alltech previously worked hard to engage also Gazprom in the project and in 2012 established a joint working group on project development. However, as Gazprom’s  has shifted its focus towards the Far East, the interest in the Pechora project has cooled.

Alltech is dependent of an alliance with one of the two state companies because of their monopoly position on LNG exports. New legislation adopted in 2013 gives only Gazprom, Rosneft, as well as Novatek in the Yamal LNG project, the right to export LNG. The Pechora LNG will produced an estimated 10 million tons per year, most of it planned shipped to western markets.

The plant is to be built near the village of Indiga, about 230 km west of regional capital Naryan-Mar.

Originally, the Pechora LNG is planned to be based on the resources of the Kumzhinskoye and Korovinskoye fields. However, with Rosneft on board the plant could easily include also offshore resources.

The Kumzhinskoye field will constitute a core source of gas for the Pechora LNG.

For Rosneft, the interest in the Pechora LNG is connected with the company’s expanding engagement on the Russian Arctic shelf. Among the company’s major number of offshore licenses are several huge gas fields. Rosneft President Igor Sechin has openly confirmed that plans for two LNG plants are on the table, one of them at Sakhalin.

Increasingly, Rosneft is challenging not only Gazprom’s export monopoly, but also the company’s gas pipeline monopoly. In a company presentation made this week, Igor Sechin indicated that he wants to take on the ownership of a planned gas pipeline to China, Vedomost reports. If Gazprom’s pipeline monopoly comes to an end, it will result in a major power shift in the whole Russian energy sector.