LNG

Rosneft, the Russian oil and gas company and the largest refiner and former partner of international majors such as ExxonMobil and BP, reported a fall in profits but is still managing the Western sanctions storm better than pipeline natural gas company Gazprom and LNG project developer Novatek.

Rosneft said that in the nine months to the end of September 2023 revenues declined to 6,612 trillion roubles ($74.4 billion), down from last year 7,202 trillion roubles ($81.05Bln) during the same nine months.

Operating income dropped to 1,778 trillion roubles ($20.10 billion) from 2,014 trillion ($22.65Bln) in the same nine months of 2022.

BP had previously held a 20 percent shareholding in Rosneft but pulled out immediately following the Russian invasion of Ukraine in February 2022.

Sakhalin projects

ExxonMobil also ended its decades-long involvement in Russia, exiting major oil and gas joint ventures with Rosneft off Sakhalin Island in the Russian Far East.

Rosneft said its production of liquid hydrocarbons increased by 3.9 percent in the first nine months of 2023 to 4 million barrels per day, mainly due to resumption of production at the Sakhalin-1 oil project.

Total production of all hydrocarbons rose by 10.7 percent in the nine months to 5.5M barrels per day of oil equivalent, whereas output of hydrocarbons in the third quarter had amounted to 5.4 million barrels per day of oil equivalent.

Production of liquid hydrocarbons in the third quarter equalled 3.9M barrels per day amid Russian oil production restrictions since March 2023 to offset the effects of sanctions.

Rosneft’s natural gas production increased by 33 percent in the nine months year-on-year to 1.5M barrels of oil equivalent per day.

Natural gas and associated gas are produced by 35 subsidiaries and joint ventures of Rosneft in Western and Eastern Siberia, Central Russia, Southern European Russia and the Far East.

Refining

Over the years, Rosneft has been consistently implementing a programme to modernise its refineries, which has enabled it to expand its product range and improve the quality of its products such as gasoline, diesel and jet fuel.

The company's refining unit operates 13 major refineries in the Russian Federation and total design capacity of the company's refineries in Russia is 118.4 million tons of oil per year.

Rosneft, which has a 40 percent share of the Russian refining market, said its oil refining throughput increased by 3.3 percent in the reporting period year-on-year to 65.8M tons, and rose 0.9 percent quarter-on-quarter to 21.7M tons.

Novatek, the operator of the Yamal LNG plant in Arctic Russian and developer of the Arctic LNG II joint venture, has won the auctions for two subsoil licence areas, including the Arkticheskoye and Neytinskoye gas fields on the Yamal Peninsula in the Yamal-Nenets Autonomous Region of Northern Siberia.

Novatek’s bidding was carried out by the wholly owned subsidiary Yamal LNG Resources.

The Arkticheskoye and Neytinskoye fields have combined estimated hydrocarbon reserves of 2.9 billion barrels of oil equivalent, including 413 billion cubic metres of natural gas and 28 million tons of liquids, according to the Russian hydrocarbon classification system.

The licence terms are for 27 years and resulted in cumulative one-time payments for the subsoil use of 13.15 billion Russian roubles ($180 million).

“The new licence areas are located in close proximity to Novatek’s existing assets on the Yamal Peninsula and expand the company’s resource base for implementing LNG projects,” said Novatek.

The current Yamal LNG feed gas comes mainly from the South Tambey (Tambeyskoye) gas field, located near the port of Sabetta on the Yamal Peninsula.

South Tambey contains 72 commercially viable gas layers, including 33 shallow dry gas layers and 28 deeper gas layers. The depth of these layers varies from 900 metres to 2,850m.

This means the new fields to be developed in the future will not need to come in stream for about 15 to 20 years to supply Yamal LNG, though another project could be developed from the resources.

Reserves

The South Tambey field’s estimated reserves stand at 44 trillion cubic feet of gas and 550 million barrels of condensate, while the proven reserves stand at 1.26 Tcf of gas and 51.6MT of gas condensate.

South Tambey is capable of producing up to 27 Bcm of natural gas a year over 20 years.

A total of over 200 directional production wells are planned to be drilled for the full development of the field.

Novatek’s upstream activities and LNG projects are concentrated mainly in the prolific Yamal-Nenets region, which is the world’s largest natural gas producing area, accounting for around 80 percent of Russia’s gas output.

The existing Novatek Yamal LNG facility has annual output of over 18 million tonnes power annum

The company also expects that all three liquefaction Trains at the Arctic LNG II plant will come on stream on the Gydan Peninsula in a two-year time span from 2023.

The start-up of the first Arctic LNG II Train is planned for 2023, the second in 2024 and the third Train in 2025.

Arctic LNG II will produce 19.8 million tonnes per annum of LNG from the principal feed-gas resources, the Utrenneye gas fields.

The new Arctic plant involves the installation of three gravity-based structures in the Gulf of Ob and related LNG storage facilities of a combined 687,000 cubic metres capacity.

Novatek is the largest independent natural gas producer in Russia and is second only to Gazprom.

Gazprom and RusGazDobycha, a special purposes company securing gas supplies for Russia’s chemicals industry and which is a partner in the Ust-Luga LNG production plant proposed for west of St Petersburg on the Baltic Coast, have reached a final investment decision on the massive Semakovskoye gas field in Western Siberia.

TechnipFMC, the LNG and energy engineering company planning to soon separate into two companies, posted a fourth-quarter net loss of $2.41 billion because of charges, though LNG project contract awards in 2019 soared to $8 billion and more are expected even amid the current weak commodity prices.

Teekay LNG, the fleet owner and operator of Ice-class carriers serving the Yamal plant in Russia, has found itself as a related and “blocked” entity under US sanctions imposed against units of Chinese shipping line COSCO for allegedly shipping Iranian oil.

Novatek, the Russian developer of the Arctic II LNG project on the Gydan Pensinsula, said it signed a deal with Franco-US energy contractor TechnipFMC for the engineering, procurement, construction and commissioning of the liquefaction plant to produce 19.8 million tonnes per annum.

French energy major Total said it doubled its first-quarter liquefied natural gas sales with the start-up of several projects as it put a price tag on its new Arctic LNG stake and signed up for two other key projects elsewhere.

Novatek, the Russian operator of the Yamal LNG plant in Siberia, said a subsidiary of the Yamal LNG stakeholder, China National Petroleum Corp., has decided to become a shareholder in Novatek’s second liquefaction joint venture, Arctic LNG II.

Sovcomflot Group, the Russian shipping line with 12 liquefied natural gas carriers in its fleet, narrowed its annual net losses as charter rates improved for LNG and energy trading sectors amid continuing difficult conditions during mid-2018.

Russia delivered a record amount of liquefied natural gas to Europe in February from the Yamal export plant in the Arctic region and became the biggest monthly supplier to the continent for the first time, overtaking Qatar, Nigeria and Algeria.