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Russian Oil Giant Prepares Massive $157 Billion Arctic Oil Project

Arctic Oil Project

Rosneft is preparing to lead an Arctic oil field development project that will cost an estimated $157 billion (10 trillion rubles).

Reuters quoted Russia’s Deputy Energy Minister Pavel Sorokin as announcing the price tag of the Vostok Oil project to media last week, adding that the Kremlin had already agreed on a tax relief package that would help with the Artic oil and gas push.

The Vostok Oil project will include already producing fields as well as untapped ones, and Rosneft will develop them along with partner Independent Petroleum Company. The tax relief for this project alone could reach some $940 million (60 billion rubles) annually, the chief of the tax department of Russia’s Finance Ministry said.

The tax relief package for the energy industry has been the subject of heated debate in political circles because at the same time that the Kremlin is lending its generous support for oil and gas, it is hiking other taxes, on citizens, and extending the retirement age as part of a delayed and highly unpopular retirement system reform.

Yet the Vostok Oil project could add some 2 million bpd to Russia’s overall oil production, which although not the biggest contributor to federal GDP is still the biggest single contributor to export revenues, at 53.8 percent.

The government’s tax relief would certainly go a long way towards helping Rosneft and its partner develop the Arctic fields, but it will not be enough on its own. To bring the plans to fruition, Rosneft would need foreign partners as well. And it has already found them: Indian and Chinese investors have already agreed to invest in Vostok Oil in exchange for minority stakes in the fields that the project includes. Some of them had put forward as a condition for the investment the agreement of a government support package and now that this has been largely agreed, the project could move forward.

By Irina Slav for Oilprice.com

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  • naveen sreedevan shitijibes unilever on October 29 2019 said:
    India has agreed to be partner? these jokers here i.e. ONGC videsh( Oil natural gas corp overseas ) is a real dud. they have been drilling where there is no hydrocarbons -only clay.

    so many ventures have been botched b y ONGC.
    Yet they claim to meet 15% of crude for india. Which i suspect. as India's crude import bill is over $110 billion, yet retails sales of oil/petrochemicals together for entire India is not even 120$(ex-factory cost of sales) -big fraud going on india since 1950s.

    Assam, Andhra (East coast of india -Bay of bengal sea) off shore (godhavari basic kg2 basin) are all in a 'quagmire' and the finance is a black hole. ultimately anyone one dealing with ONGC is like entering a whirlpool.
    i think india govt might as well be frank and ask Russia's Rosneft ,Gazprom ,etc and other big players for oil/as supply rather than playing this mind games.

    the best Ongc Ltd can do like other INDIAN giants is supply manpower(turnkey projects management)

    As India has no such technology in oil/gas exploration - geophysics, geothermal etc.

    I am sure experts hv not forgotten early 90s scandal involi disgraced Enron inc -dhabol project power supply in Mumbai city. (finance capital of india/SAARC.)
    I still remember Enron inc CEo name's Rebecca mark.. the whole project became scam and y generated gossip, news but no electricity was produced. Besides, bank loans fraud.
    all thanks to the genius leadership in New Delhi, India.

    Even the present Prime minster modi like all others before him has competed over 60 Visits meeting all leaders singing agreement. and it has only resulted in 'news GDP' -noise. no work.
    Bank loan fraud is now reached a size that is comparable in 'cosmic' terms, to gaining enough momentum for a cosmic explosion throwing of debris across the national landscape-creating a possible black hole -BIg crunch. in other words Big RIp is coming for the Indian lairs.

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