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Russia’s state-owned heavyweight Rosneft plans to sell three southern oil field assets to focus its resources on developing its Vostok Oil project in Eastern Siberia, Reuters has reported, citing unnamed sources familiar with the matter.
The assets in question are Stavropolneftegaz, Ingushneft, and Dagneft, which together produce about a million tons of crude annually, the Reuters source said. This compares with a total output of 205 million tons for Rosneft.
Vostok Oil, in Russia’s Far East, comprises several groups of oil fields holding an estimated 44 billion barrels of oil. Work on the project began in January this year. The total cost of its development has been estimated at $170 billion over the lifetime of the fields. The project is expected to create 400,000 jobs and involve building 15 new industrial towns and 800 km of new pipelines.
Because of the massive cost of Vostok Oil’s development, Rosneft has been looking for foreign partners. Commodity trading major Trafigura said last December it had acquired a 10-percent stake in the project, getting access to high-quality crude oil resources from a major new onshore oil-producing region in Siberia’s Taymyr province.
Reports from January had it that the Russian state giant was also negotiating with Trafigura’s peers—Gunvor, Glencore, and Vitol—to also participate in the project. Vostok Oil has been touted by Rosneft’s Igor Sechin as one of the company’s “large projects which are low cost, high-margin, with high-quality resources and a low carbon footprint.”
Vostok Oil is scheduled to be pumping some 600,000 bpd by 2024, or a total of 30 million tons by that year. According to plans, this should rise to 50 million tons during the second phase of the project, or 1 million bpd, and 100 million tons during its third phase, or 2 million barrels daily.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.