Moscow touts potential of eastern regions
Thursday, Aug 10, 2017
Russia’s Far Eastern regions are set to become a hotbed of upstream and downstream activity over the coming decades as new megaprojects come on line, according to a report from the Russian Energy Ministry.

At a meeting with President Vladimir Putin at the Kremlin on August 4, Energy Minister Alexander Novak said that the oil and gas sector in Eastern Siberia and the Russian Far East was in “a phase of active growth.” As new projects come on stream, total crude production will move closer to the target of 118 million tpy (2.37 million bpd) by 2035.

The plan is part of Russia’s national energy strategy over the next 18 years, which calls for a 70% hike in the regions’ crude output from the 69 million tonnes (1.4 million bpd) that was lifted in 2016.

“Over the last five years, gas production in the region has increased by almost 10% and amounted to 32.8 bcm in 2016,” Novak added. “The energy strategy envisages an increase in gas production across the Far Eastern district by 2035 of 2.5 times – up to 80 bcm per year,” he continued. Novak said that the region’s key gas-production centres for the next two decades would be Sakhalin Island and Yakutia to the north.

Downstream, annual oil refining capacity in Russia’s Far East is also expected to rise by over threefold to around 39 million tonnes (783,000 bpd) by 2035. Around 31 million tonnes (623,000 bpd) of annual throughput will come from the Far East Petrochemical Co. (FEPCO) facility being planned by national oil champion Rosneft alongside junior Chinese partner ChemChina. Financing and supply issues have dogged the project, however, the first phase of which is scheduled for completion in 2020.
 
New projects
Expansion of existing pipeline infrastructure is also under way to direct the majority of crude to buyers in the Asia-Pacific region. By the end of this year, Russia plans to double capacity along the China-bound Skovorodino-Mohe spur of the East Siberia-Pacific Ocean pipeline (ESPO) to 30 million tonnes (600,000 bpd).

The feedstock needed to fill pipelines and supply new refining complexes will come from a raft of new upstream schemes currently under development. In 2017, Rosneft expects to commission the Tagulskoye oil field, which is situated in the Vankor cluster in the Krasnoyarsk Krai. The site is estimated to hold ABC1+C2 reserves of 286 million tonnes (2.1 billion barrels) in oil and 228 bcm of gas. It is slated to reach an output of 4 million tpy (80,000 bpd) next year, according to Rosneft.

Next year, Slavneft, a joint venture between Rosneft and state-owned rival Gazprom Neft, intends to launch full-scale production at the Kuyumbinskoye field, also in Krasnoyarsk. The play is slated to hold C1 and C2 oil reserves of 282 million tonnes (2.0 billion barrels). First flows were reported at the site in March this year, following the commissioning of a pipeline between the field and the ESPO system.

In 2019, Rosneft is also due to start commercial production at the nearby Yurubcheno-Tokhomskoye field, which harbours recoverable oil reserves amounting to 237 million tonnes (1.7 billion tonnes). The deposit is scheduled to yield 15,000 bpd of trial production this year, but output will eventually reach a plateau of 100,000 bpd.

Meanwhile, state gas giant Gazprom is contracted to supply 38 bcm per year to China via the Power of Siberia line under a 30-year agreement with China National Petroleum Corp. (CNPC). The first supplies will be delivered in December next year and will be sourced from the Chayandinskoye and Kovyktinskoye gas condensate fields in Eastern Siberia, which will see first commercial gas in 2019 and 2024 respectively.
 
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