Rosneft Brings Trafigura on Board at Arctic Venture

Russia's Rosneft announced on November 17 that its board of directors had approved the sale of a 10% stake in the Vostok Oil venture in the Russian Arctic to commodities trader Trafigura.

Vostok Oil comprises a cluster of oil and gas fields in the north of the Krasnoyarsk region which Rosneft estimates to contain 6bn metric tons (44bn barrels) in liquid hydrocarbons. There are also substantial gas reserves, with Rosneft CEO Igor Sechin recently claiming that as much as 50mn mt/yr of LNG could be exported from the fields. Oil output is expected to exceed 2mn barrels/day.

Rosneft did not disclose the value of the deal with Trafigura. It has been seeking a partner at Vostok Oil for some time to help cover its $31bn cost, previously reaching out to investors in Japan and elsewhere in Asia. The bulk of Vostok Oil's crude and LNG is expected to be shipped eastwards. Rosneft already has a close relationship with Trafigura, with the latter handling the bulk of the Russian producer's shipborne oil exports.

Rosneft also announced it reached a deal with Russian power utility Inter RAO for the design and construction of energy infrastructure for the project, including 2.5 GW of generation capacity and over 3,500 km of power lines. It has also placed an order for 10 oil tankers at the Zvezda shipyard in the Far East, with plans to obtain 50 ships of various classes for the project in total.

In addition, the board approved a long-term contract for the supply of 100 rigs to drill Vostok Oil's 20,000 production and injection wells. It has also hired Russian truck manufacturer Kamaz to provide vehicles and special equipment, and establish service centres at the oilfields.

Rosneft estimates that Vostok Oil's implementation will result in a 2% bump in Russia's annual GDP, while creating tens of thousands of jobs and providing opportunities to expand the use of local high-tech equipment.