Rosneft offers Japan oil deals as rivalry with Opec heats up
November 07 2015 11:15 PM
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A Rosneft petrol station in Moscow. Russia’s largest oil producer offered stakes in projects ranging from exploration to development and production, including East Siberia’s Verkhnechonsk, Taas-Yuriakh Neftegazodobycha, Tagul and Suzun projects, which could be used to supply Japan.

Bloomberg
Moscow

Rosneft chief executive officer Igor Sechin offered Japanese investors a raft of Siberian oil deals as Russia increases energy supplies to Asian markets traditionally supplied by the Middle East.
Russia’s largest oil producer offered stakes in projects ranging from exploration to development and production, including East Siberia’s Verkhnechonsk, Taas-Yuriakh Neftegazodobycha, Tagul and Suzun projects, which could be used to supply Japan, according to a copy of Sechin’s speech delivered in Tokyo on Friday that was obtained by Bloomberg News.
“It is surprising that even with modern geography allowing for a wide range of imports, 83% of supplies come from the Gulf, far away from Japan, and with high logistical risks,” Sechin said, while showing a slide describing the logistical advantages of Russia as a supplier to Japan. “At the same time only about 13% come from closer suppliers in the Asia Pacific region.” Saudi Arabia led the Organisation of Petroleum Exporting Countries last year to defend market share rather than cut production to support prices amid a supply glut. Competition for global market share has intensified this year, including Saudi shipments to Russia’s traditional customers such as refineries in Poland and Sweden, and increased Russian deliveries to China.
“The addition of Japanese investors makes sense as it would ensure a market for oil from Rosneft projects as Japan is still a large importer of crude,” said Alexander Kornilov, a Moscow- based oil analyst at Alfa Bank.
Separate from the deals on offer, Rosneft plans to make crude deliveries to Japan of 4.2mn tonnes this year and oil product deliveries of 1.2mn tonnes, Russian newswire Interfax cited Sechin as saying today in an interview on Russian state television. The company supplied 3.2mn tonnes of crude to Japan three years ago, Interfax said. Rosneft needs alternative sources of funding for its East Siberian projects because it remains highly indebted and subject to international sanctions, Kornilov said. The projects themselves, barely profitable at current oil prices, could offer higher returns for partners when crude markets recover, he said.
Russian investments would offer higher potential returns than Japanese investments into oil sands or shale oil in the US and Canada, Sechin said. The ability to export energy from North American projects is also doubtful, he said.
Natural gas projects are also on offer to Japan such as Kharampur and exploration off the coast of Sakhalin, Sechin said. Stakes in a far-eastern shipbuilding complex and petrochemicals plant are also available, according to Sechin’s speech and presentation slides. Rosneft this year agreed to sell a 15% stake in producer Vankorneft to India’s Oil & Natural Gas Corp for $1.27bn, and 20% of Taas-Yuriakh Neftegazodobycha to BP for $750mn.

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