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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Russia's Rosneft sells 5% of $85 billion project

    Rocky
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    Russia's Rosneft sells 5% of $85 billion project Empty Russia's Rosneft sells 5% of $85 billion project

    Post by Rocky Tue 15 Jun 2021, 7:25 am

    Russia's Rosneft sells 5% of $85 billion project

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    The Russian oil giant Rosneft has agreed to sell a stake in its mega-project "Vostok Oil" to a "consortium" that includes the "Vitol" group, so that Rosneft continues to raise more money from commodity trading companies after the company's deal with Trafigura Group " last year.
    Rosneft said in a statement that Vitol and Mercantile and Maritime will acquire a 5% stake in the project, without disclosing the size of the deal.
    Rosneft said in February that Trafigura had paid 7 billion euros ($8.5 billion) for a 10% stake in the project.
    Russia's largest oil producer is turning to energy and commodity trading companies as many energy companies and Western investors are reluctant to back big oil projects, especially in areas that carry environmental risks such as the Arctic, where the "Vostok Oil" project is located.
    This coincides with energy and commodity trading companies that have made record profits due to the large fluctuations in prices due to the pandemic, looking to secure long-term supplies.
    Igor Sechin, chief executive of Rosneft, said in the statement that the project "is receiving interest from primary materials suppliers, commodity trading and logistics companies" that support extensive supply chains.

    Transformation into traders

    Rosneft, which has been partially excluded from the global financial system due to US sanctions on Russia, needs the money of the energy and commodity trading companies.
    The total value of the Vostok Oil project is estimated at $85 billion, according to estimates of the deal concluded with Trafigura, which is more than the market value of Rosneft itself.
    Trading companies can provide huge financial commitments for the project, which could pump one million barrels per day of oil by 2027.
    Trafigura raised a 5.78 billion euro loan led by a Russian bank to fund the acquisition, according to the company's disclosures to regulators.
    While Vitol, which announced last year the largest annual net profit ever at about $ 3 billion, has not yet announced how to finance the purchase. It is expected that the acquisition will be completed after the parties obtain the required regulatory approvals, according to the statement.
    Murtaza Lakhani, who does not appear much in the media, leads Vitol's partner in the deal, Mercantile and Maritime. Bloomberg News reported that Lakhani and his companies acted as a source of massive funding for the Kurdistan government from oil trading companies and energy companies such as Rosneft.
    A Vitol spokeswoman in London would not comment on the upcoming Vostok Oil project deal. Email and phone calls to Mercantile and Maritime were not immediately answered. While a former spokesperson for Lakhani told Bloomberg News, oil deals and financing for oil projects have always complied with applicable laws and regulations.

    Arctic ambitions

    The oil flowing from the Vostok Oil project offers energy trading companies easy access to Asian markets via the Arctic route through the sea, which is a much shorter passage to Asian markets than the Suez Canal, according to a Citigroup report.
    Estimated production of the project is about 25 million tons of oil annually, equivalent to about 500 thousand barrels per day by the year 2024 to double production and reach its peak by the year 2027. The project is scheduled to be developed in the future to produce about 100 million tons annually compared to the total production of Russia of crude oil and condensate of 513 million tons in 2020.
    Rosneft continues to press for the completion of the project at a time when oil production from areas that carry environmental risks such as the Arctic become controversial, especially with the increasing demands to combat climate change.
    "Better than Middle Eastern crude," Sechin said while presenting the president with a bottle of crude produced at a Vostok oil well to Russian Vladimir Putin last year.
    Sechin warned earlier this month of a "severe" oil deficit, as global producers increasingly direct money to a "rapid" shift to other energy sources amid mounting pressure to switch to clean energy.
    The Vostok Oil project includes several production fields located on the Taimyr Peninsula in the Krasnoyarsk region, which hold an estimated reserve of more than 6 billion tons of low-sulfur crude oil, according to Rosneft.
    The company said in a statement on Thursday that the cost of producing a barrel at the project is low, "with 75% less carbon emissions compared to other major oil projects in the world."
    Citigroup said the project is of strategic importance to Russia, as it helps the country maintain its global market share. The bank indicated that the project could represent more than 20% of Russia's total production by the beginning of the next decade.
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