RBC Daily: "Sakhalin projects to be commissioned ahead of schedule"
Prime Minister Vladimir Putin told oil companies to speed up development of deposits
The government has instructed domestic oil companies to speed up the development of their projects in the Far East. Rosneft will start to develop Sakhalin-5 in six years. It plans to build the first stage of the Primorsky petrochemical plant, at an estimated $6 billion, within six years as well.
RIA Novosti reports that while speaking at a meeting on the development of the fuel-and-energy sector in Eastern Siberia and the Far East, Rosneft President Eduard Khudainatov said the company is planning to start developing the Kaigan-Vasyugan section of Sakhalin shelf in 2017.
The Kaigan-Vasyugan section is part of the Sakhalin-5 project (Rosneft owns 51% of it and BP 49%). Four exploratory wells were drilled in the area and it is estimated that it contains 56 million tons of commercial oil, the relevant figure for gas being about 30 billion cubic metres. The Vostochno-Shmidtovsky field was included in Sakhalin-5 but in 2009 the owners refused to continue developing the deposit and gave up the license.
Putin said the companies that have received licenses to develop resources in Eastern Siberia and on the Far Eastern shelf frequently do not abide by their investment commitments. Some of them procrastinate geological prospecting whereas others delay the start of commercial production. He instructed the relevant departments to monitor how strictly these companies abide by their license agreements and report the results of these reviews to the government. The prime minister also asked them to accelerate the decision to start the construction of petrochemical facilities in the Primorye Territory.
The Primorye Petrochemical Complex project (with an estimated capacity of 10 million tons of oil per year) belongs to Rosneft. The company had discussed plans to build plants at the end point of ESTO (Eastern Siberia—Pacific Ocean oil pipeline) in 2006 but little has happened. At first Rosneft had planned to build a petrochemical complex with a capacity of 20 million tons of oil per year and a processing depth of 93%, in the Primorye Territory.
At the end of last year Rosneft reported that it would build a petrochemical complex near Nakhodka. It will consist of a petrochemical plant and an oil refinery that will produce the raw material for the former. The petrochemical plant will process 3.5 million tons of naphtha (straight-run gasoline) and liquefied hydrocarbon gases as well as 1.5 million tons of gas condensate (operations are to begin in 2016-2017). In 2013 Rosneft will decide whether it is worth building a second phase. An RBC Daily source at Rosneft reported that the first phase is estimated at about $6 billion. The company is planning to involve foreign partners in this project.
An ADE Professional Solutions partner, Artyom Zavertalyuk, said the construction of the Petrochemical Complex in the Primorye Territory and its proximity to China will upgrade Rosneft's investment, which correlates with Russia's plan to sell part of the Rosneft package. Considering the expensive high-tech equipment, a sum of $6 billion does not seem overestimated. A similar plant with a capacity of 20 million tons of oil annually (400,000 barrels per day) is currently under construction in Saudi Arabia and its cost is $10 billion. Rosneft will have to find foreign contractors for some specific jobs because Russian companies have not been involved in such projects since 1987, Zavertalyuk added.
Galina Starinskaya and Igor Pylayev
