Rosneft is looking for a place in the Power of Siberia-2
[ad_1]
According to Kommersant, Rosneft wants to supply gas from its fields in the Krasnoyarsk Territory and the Irkutsk Region to Gazprom’s projected export gas pipeline, Power of Siberia-2. The oil company has reserves of 1.5 trillion cubic meters of gas in the fields along the route of the future gas pipeline, and asked President Vladimir Putin to take them into account when designing. Analysts believe that, taking into account the huge reserves of its own, Gazprom is unlikely to be interested in receiving raw materials from third-party companies.
Rosneft asks to take into account the company’s gas reserves in the Krasnoyarsk Territory and the Irkutsk Region when designing and building the Power of Siberia-2 gas pipeline. This, according to Kommersant’s sources, was asked by the head of Rosneft, Igor Sechin, to the President of the Russian Federation. Vladimir Putin, according to Kommersant, on December 20, 2022, instructed Deputy Prime Minister Alexander Novak to work out the issue together with Gazprom.
The Power of Siberia-2 gas pipeline from Russia to China with a capacity of up to 50 billion cubic meters per year should pass through Mongolia. The resource base of the project can be the fields of Yamal and the Nadym-Pur-Taz region of the YNAO, the Kovykta field of Gazprom in the Irkutsk region and the resources of the Krasnoyarsk Territory. The pipeline is supposed to connect the gas transportation infrastructure of the west and east of the Russian Federation, allowing gasification of large cities of Eastern Siberia, which currently do not have access to main gas. Since December 2019, Gazprom has been supplying gas to China via the Power of Siberia-1 gas pipeline, whose resource base is the Kovykta and Chayandinskoye fields and which should reach a design capacity of 38 billion cubic meters by 2025.
Given the loss of most of the European market in 2022, the construction of the Power of Siberia-2 looks like the only realistic chance for Gazprom to restore gas exports in the foreseeable future. At the Russian Energy Week in October 2022, the head of Gazprom, Alexei Miller, stated that the company was at the stage of developing cost estimates for the project. But there is no firm contract between Gazprom and China for gas supplies yet, and the construction period has not been determined either.
The Power of Siberia-2 route runs close to Rosneft oil and gas fields with reserves of 1 trillion cubic meters in the south of the Krasnoyarsk Territory and another 0.5 trillion in the Irkutsk Region. The head of the company asks to take into account “the volumes of independent producers to achieve a synergistic effect in the construction of the gas pipeline,” says the interlocutor of Kommersant, who is familiar with the contents of the letter. Rosneft is the country’s third largest gas producer after Gazprom and NOVATEK and the largest producer of associated petroleum gas (APG).
According to Kommersant’s interlocutor, in the letter, Mr. Sechin emphasizes that gas fields that do not have access to the main infrastructure cannot be monetized. He notes that already now, in order to utilize 8 billion cubic meters of APG per year, the company is forced to pump it back into the reservoir without technological necessity or partially burn it. Access to the pipeline will allow independent producers to monetize unclaimed gas reserves in the region, remove restrictions on oil production from fields with gas caps, reduce investment in re-injection in Eastern Siberia, and minimize APG flaring.
Russian legislation provides for fines for APG flaring, so oil companies try to minimize it by using gas in generation and pumping it into the reservoir to increase oil recovery. In many cases, such investments are not profitable on their own.
Gazprom declined to comment, Rosneft did not respond to Kommersant.
In 2014, the oil company was already trying to gain access to the Power of Siberia, which Gazprom built in China on the basis of gas from the Chayandinskoye and Kovyktinskoye fields. Gazprom did not formally object to buying gas from independent producers, but at an internal price, however, Rosneft wanted to sell gas at an export netback (see, for example, Kommersant dated July 2, 2014). As a result, Gazprom managed to convince the authorities that there was no place for other companies in Power of Siberia.
Moreover, at that time, Kommersant’s interlocutors believed that Gazprom could purchase a certain amount of third-party gas, given the difficulties in developing its own East Siberian fields and the tight terms of the contract with China. Now, Gazprom does not have such problems even in theory, since the base of the Power of Siberia-2 will be the Yamal fields that have already been launched or are close to being launched.
“The Power of Siberia-2” is the only real pipeline route for the export monetization of Gazprom’s gas in the Yamalo-Nenets Autonomous Okrug, believes Mikhail Grigoriev, head of the Gekon consulting center. At the same time, he adds, the declared throughput of the pipeline, compared to the volume of gas reserves, looks very modest – only 50 billion cubic meters per year: “With the huge reserves of the Bovanenkovskaya group, the unopened Tambeyskoye, Malyginskoye and other fields of Yamal and adjacent water areas, this is extremely small. For comparison: the Bovanenkovo-Ukhta gas pipeline pumps over 100 billion cubic meters. It is unlikely that in such a situation, Gazprom will be interested in receiving raw materials from third-party companies.”
[ad_2]
Source link