Ruskhim is looking for a partner to develop gas fields in the Nenets Autonomous Okrug

According to Kommersant, Vitaly Yuzhilin’s Ruskhem wants to attract a partner to develop the Kumzhinskoye and Korovinskoye fields in the Nenets Autonomous Okrug, gas from which is planned to be sent to the future gas chemical complex (formerly Pechora LNG). Zarubezhneft could be such a partner; negotiations were also conducted with Gazprom Neft. CAPEX for the construction of a methanol plant based on the Pechora LNG project, excluding field development, is estimated at 220 billion rubles, the project launch date is June 2029. Methanol from the project is planned to be exported along the Northern Sea Route. Analysts warn that methanol has not risen in price on the world market as much as gas.

Vitaly Yuzhilin’s Ruskhem is looking for a partner to develop the Kumzhinskoye and Korovinskoye gas fields, whose licenses are included in the former Pechora LNG project, sources familiar with the company’s plans told Kommersant. According to them, negotiations were held with large oil companies, including Gazprom Neft and Zarubezhneft, but so far there has been no decision on entering the project. Two Kommersant interlocutors claim that the most active negotiation process is currently underway with Zarubezhneft.

Zarubezhneft is developing the Kharyaginskoye field in the Nenets Autonomous Okrug, and also produces oil and gas on the shelf of Vietnam. Gazprom Neft has more experience with new large projects in the Arctic, but its parent company Gazprom made significant efforts in 2016 to prevent Pechora LNG (then owned by Rosneft and intended to create a gas liquefaction plant) from happening. Then Gazprom was ahead of Rosneft in the fight for the Vaneyvisskoye and Layavozhskoye fields in the Nenets Autonomous Okrug, purchasing them at auction for more than 23 billion rubles. and thereby depriving Rosneft of the necessary resource base, which subsequently forced the oil company to abandon the project and sell it. Now Gazprom plans to develop these fields in partnership with LUKOIL.

Gazprom Neft, Zarubezhneft and Rushim declined to comment.

The reserves of the Kumzhinskoye and Korovinskoye fields are about 200 billion cubic meters. Ruskhim is going to build on their base a methanol plant with a capacity of 1.8 million tons per year, as well as a port terminal near the village of Indiga for loading methanol for export along the Northern Sea Route.

According to Kommersant’s sources, the project’s CAPEX increased to 220 billion rubles. excluding field development.

In 2021, it was estimated at 205 billion rubles, but taking into account the development of fields. It is expected that half of the financing will be provided by Ruskhim, the other half by the partner responsible for the development of the fields, who will become their co-owner.

Licenses for the Korovinsky and Kumzhinsky areas belong to Euroseverneft LLC and SN Invest JSC, respectively. Their parent company Ruskhim Gas (owned by LLC UK Ruskhim) plans to purchase gas from them. The management company “Ruskhim” itself is owned by Vitaly Yuzhilin (50%), Dmitry Ozersky and Maria Mirgorodskaya (until August 2023 – Gennady Mirgorodsky) each have 25%.

Vitaly Yuzhilin bought Pechora LNG at the end of 2020 from Dmitry Bosov’s Alltech group, deceased in May 2020. Prior to this, Alltech planned, together with Rosneft, to build an LNG plant on the basis of the Kumzhinskoye and Korovinskoye fields. The project was never implemented due to a lack of resource base and the lack of a license for LNG export (it is not needed for methanol). In 2018, Rosneft decided to withdraw from the project. In the absence of a partner, Alltech considered the possibility of selling the fields to Gazprom.

According to independent expert Alexander Sobko, capital costs of $2.4 billion for the entire production, or $1.4 thousand per ton, look at the level of world analogues or even slightly higher.

But, according to him, much will depend on what the ratio of shares of Russian and foreign equipment (probably Chinese) turns out to be.

“In the current circumstances, the project can count on Asian sales markets and, accordingly, a fairly long transport distance, especially since the European methanol market is, in principle, small. It is clear that the main competitive advantage of the project is relatively cheap gas, although the project requires a gas pipeline 300 km long,” notes Mr. Sobko. He recalls that world methanol prices do not always follow gas prices. This is partly due to the significant volume of methanol production in Iran, as well as in China, in the latter case coal is often used as a raw material. For example, now prices for methanol in both Europe and Asia are at $350 per ton, and gas prices in Europe are about $500 per 1 thousand cubic meters. “With the rough assumption that 1 thousand cubic meters of gas are needed to produce 1 ton of methanol, this means that global gas prices are not completely translated into methanol quotations, even without taking into account production and transportation costs,” the analyst concludes.

Tatiana Dyatel, Dmitry Kozlov, Olga Mordyushenko