Russian oil supermajor sells stake in Arctic

RUSSIA / FSU POLITICS - In Brief 15 Oct 2021 by Alex Teddy

On October 14 Rosneft sold its 5% stake in a huge Arctic Oil project to Swiss and Singaporean commodity trading houses. This is the Vostok Oil Project, which is intended to exploit currently untapped resources in the Arctic and produce over 700 million barrels of oil per annum by 2030. That was Rosneft's estimate, which is optimistic. That much oil would be worth USD 60 billion a year at present prices. That would be 7% of Russia's oil production.There was a stock announcement on October 14. Rosneft said it had inked the deal with Vitol (which is one of the biggest oil trading houses) and with Mercantile and Maritime Energy (MME) which is Singaporean. Vitol bought 75% of the stake in the consortium (which means they now own 3.75% of Vostok Oil) and MME bought 25% of Rosneft's stake. Igor Sechin - CEO of Rosneft - has been striving to attract international investors to Vostok. Trafigura - also Swiss - bought a 10% stake in Vostok Oil earlier 2021.American and EU sanctions have prevented their energy companies from investing in hi-tech oil projects in Russia. This includes shale gas and deep offshore drilling. Rosneft is sanctioned as a state-controlled entity. That forfends long-term funding of the company. Rosneft claimed that Vostok Oil is not under sanctions. Even if that is true the risk of future sanctions on it deterred Western investors.The price of the deal has not been revealed. Trafigura is estimated to have put in USD 7 billion for its stake and was given a loan by a Russian stake bank.Vostok Oil needs major investment in infrastructure. It needs rigs and drilling as all such offshore projects do but it also needs pipelines and transport connections, which do...

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