Rosneft to spend $1.6 billion on Russia’s Far East

Rosneft is planning to spend around 52 billion rubles ($1.6 billion) in 2013 on Far East development programs in the company’s key operating areas, Rosneft head Igor Sechin said during a videoconference led by Russian President Vladimir Putin, who had arrived in Yuzhno-Sakhalinsk. Sechin was, at the time, on board Orlan — a drilling platform located in the Sea of Okhotsk.

According to the Prime news agency, Sechin specified that 27 billion rubles would be spent on oil exploration and production, 23 billion rubles on refining and upgrading the Komsomolsk Oil Refinery, and around 2 billion rubles on establishing oil product supplies.

More about investment

According to Rosneft president, Rosneft’s investments in Eastern Siberia and the Far East could exceed 1 trillion rubles ($30 billion) over the next five years, under a conservative scenario.

“Most likely, this amount includes both the company’s own funds and money to be invested by its partners in various projects,” Alexander Kornilov, a senior analyst at Alfa Bank, said.

The expert noted that the big outlays are required primarily to finance a major contract with China, which Rosneft signed on June 21, 2013, on the margins of the St. Petersburg International Economic Forum. Under the contract, the Russian oil producer will supply 365 million tons of oil to China over 25 years.

State-controlled Rosneft is Russia’s biggest oil producer. State-owned OAO Rosneftegaz is its main shareholder, with 75.16 percent of the stock.

Rosneft also has around 138,000 individual shareholders. Last March, Rosneft consolidated 100 percent of TNK-BP to become the world’s biggest publicly owned oil company.

The Orlan platform was built in 2005 for the Sakhalin-1 project, which includes development of the Chaivo, Odoptu and Arkutun-Dagi offshore deposits located off Sakhalin’s northeast coast. Drilling at the platform has been completed.

A total of 21 wells have been drilled. Sakhalin-1 stakeholders include the American company Exxon Neftegas Limited (30 percent, the project’s operator), Rosneft (20 percent), India’s ONGC (20 percent) and Japan’s Sodeco (30 percent).

Based on materials from Vedomosti.

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