Rosneft Eyes Gas Project Start-up "Within Days"
Russian state-run oil company Rosneft expects to launch production from a major new gas project in Western Siberia "within days", the company's vice president for in-house services, Eric Liron, said on a call with investors on February 12.
Rosneft operates the East-Urengoysky, Novo-Urengoysky and Resursny licence areas in Russia's Yamalo-Nenets region through its subsidiary Rospan. Production reached 6.7bn m3 in 2019, but Rosneft wants to develop the areas further, to take output to as high as 19bn m3/year. The project has fallen years behind schedule, however.
"Rospan has completed assembly of the key equipment for the first stage of production and preparation of gas and condensate,” Liron told investors. "Start-up and adjustment works are at an advanced stage, and the first commercial gas from the project should start to arrive in a few days." The expansion's second phase is scheduled to achieve first gas in the third quarter of 2021, according to Rosneft.
Rosneft took control of Rospan as part of its $55bn takeover of Anglo-Russian company TNK-BP in 2013. Rosneft is working on several major projects to build up its domestic gas business. But progress has been slow. As recently as 2017, the company's goal was to reach 100bn m3 of annual gas supply by 2020, but instead output fell 6.2% to 62.8bn m3.
Rosneft has also revealed a further delay at the Kharampurskoye field, another key gas project, which it is working on with BP. The field, also in Yamalo-Nenets, is now on track for commissioning in 2022. It is due to reach its plateau production capacity of 10bn m3 annually the following year.
Construction of the gas processing unit at Kharampurskoye reached 40% at the end of last year, Rosneft has said. The company's joint venture with BP hired Turkish firm Tekfen in January last year to build a 90-km pipeline connecting the field with Russia's national gas system. Tekfen said at the time it would finish the work by June 2021.
Finances
Rosneft posted its latest financial results on February 12, reporting an almost 80% decline in net profits for 2020 to rubles 147bn ($2bn). The decline was chiefly the result of weaker prices and a 11.1% fall in oil and gas condensate production to 4.11mn barrels/day, as Rosneft was forced to cut supply to comply with Russia's Opec+ commitments. Ebitda was down 42.6% at rubles 1.2 trillion.
Performance in the fourth quarter was stronger, with the oil company swinging to a net income of rubles 324bn from a rubles 64bn loss in the previous three months, thanks to a rally in oil prices towards the end of last year.
"Despite all the difficulties of 2020, the company has achieved a net income, which will be the basis for the distribution of dividends in accordance with the dividend policy,” CEO Igor Sechin commented.
Rosneft's numbers were also affected by the €7bn ($8.5bn) closure of a 10% stake in its Vostok Oil project in the Russian Arctic to commodity trading giant Trafigura in December. But it also bought $9.6bn in assets from private partner Neftegazholding in the same month, to add to Vostok Oil's resource base. The project in the north of the Krasnoyarsk region is expected to flow 500,000 b/d of oil by 2025 and twice that amount by 2027, and potentially LNG at some point.
The Trafigura sale allows "for the practical start of the execution of the project," Sechin said. The company is in talks to bring on board additional partners, Rosneft's first vice-president Didier Casimiro said, noting that trading houses, international oil majors and oil-importing countries like India had all expressed their interest in taking part.