Rosneft tempts trading houses into Arctic Oil project

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By Ashish Mitra --
Saturday, 30 Jan, 2021

Trading houses generally avoid investing directly in fields of production, but the Rosneft deal may be attractive as it could give them access to a long-term major source of supply for the growing Asian market. Neither Rosneft nor the trading houses had any comment to make on the talks.

Vostok Oil is one of Russia's biggest oil projects comparable in size with the exploration of West Siberia in the 1970s or the U.S. Bakken oil province over the past decade.

Rosneft has estimated its resources at 44 billion barrels, enough to supply the world for over a year and also said that it could produce 1 per cent of global oil later this decade at a price competitive with the cheap barrels of Middle East producers.

Vostok will require vast investments in new pipelines, roads and other infrastructure in East Siberia and the Arctic with oil to be shipped to Asia via the Northern Sea route.

Rosneft attempted to sell stakes in the project in 2019 when its chief executive Igor Sechin travelled to Japan, China and India for a road show with local investors. Talks were stalled after the oil price collapse of 2020, according to sources with knowledge of the matter while approaches to oil majors have also generated little interest so far due to their rising emphasis on green energy.

Rosneft has offered the trading houses the chance to buy into Vostok in exchange for immediate contracts for crude oil and refined products, according to the sources.

Rosneft tempts trading houses into Arctic Oil project. Trading houses generally avoid investing directly in fields of production, but the Rosneft deal may be attractive as it could give them access to a long-term major source of supply for the growing Asian market. Neither Rosneft nor the trading houses had any comment to make on the talks.

Vostok Oil is one of Russia's biggest oil projects comparable in size with the exploration of West Siberia in the 1970s or the U.S. Bakken oil province over the past decade.

Rosneft has estimated its resources at 44 billion barrels, enough to supply the world for over a year and also said that it could produce 1 per cent of global oil later this decade at a price competitive with the cheap barrels of Middle East producers.

Vostok will require vast investments in new pipelines, roads and other infrastructure in East Siberia and the Arctic with oil to be shipped to Asia via the Northern Sea route.

Rosneft attempted to sell stakes in the project in 2019 when its chief executive Igor Sechin travelled to Japan, China and India for a road show with local investors. Talks were stalled after the oil price collapse of 2020, according to sources with knowledge of the matter while approaches to oil majors have also generated little interest so far due to their rising emphasis on green energy.

Rosneft has offered the trading houses the chance to buy into Vostok in exchange for immediate contracts for crude oil and refined products, according to the sources.