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« May, 2020
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Main page News room Rosneft today Igor Sechin Made a Report at the Presidential Commission For Fuel and Energy Industry Excerpts from Rosneft President speech on the Far East fuel and energy complex development strategy
Excerpts from Rosneft President speech on the Far East fuel and energy complex development strategy

Igor Sechin: As agreed with the Government, we, within the Commission, today introduce Investorsment programs of fuel and energy complex companies for the Far East Region, Eastern Siberia. Rosneft is dynamically operating in the Far East Region. The development of the first field began 25 years ago on Sakhalin, and some people are still working for the Company. This remains one of our priority areas of activity. As a matter of fact, we decided to have Annual General Meeting of Shareholders in Khabarovsk this year in order to demonstrate the importance of this region for our Company. The Far East and Transbaikal cover 45% of the territory of Russia, which is inhabited by over 10 million people. Rapid development of APAC countries sheds new light on the place of the Far East in the Company plans. Over the last years we have significantly increased our presence in this region. Please note that the Company Investorss a lot of money in the development of the Far East and Eastern Siberia projects. We Investorsed about 160 billion rubles over the past year, and payments to the revenue at all levels amounted to about 300 billion rubles. Over 20 thousand of people are provided with high-skill jobs. Today we can speak of the creation of new large-scale oil producing and oil refining clusters in the Far East regions. Currently, the annual output at producing fields of Eastern Siberia and the Far East, including Sakhalin–1, Sakhalinneftegaz, Verkhnechonskneftegaz, and Taas-Yuryakh totals 32 million tons of oil and about 1.6 cubic meters of gas. Throughput performance at existing capacity amounted to 25 million tons. As part of the Vankor field - you’ve seen the switching on today - we are forming a new basin, which includes the Suzunskoye, Tagulskoye, and Lodochnoye fields, as well as the Kuyumbinskoye and Yurubcheno-Tokhomskoye fields in Eastern Siberia, and the Srednebotuobinskoye field in Yakutia. These fields will have provided incremental ultimate recovery up to 30.9 million tons of oil, and over 8 billion cubic meters of gas by 2020. As for gas, we are planning to end up with up to 35 billion cubic meters extraction annually at the fields of Eastern Siberia and the Far East. And, as we have already discussed today, we certainly need to think about monetization and commercialization of East Siberian gas. I’d like to stress that large-scale implementation of Rosneft projects creates opportunities for the development of the entire Far East region. Eastern Petroleum Company is one of pilot and major development projects of the Company in this region. On your behalf, Vladimir Vladimirovich, our Company has started implementation of this large-scale project. It has a number of undeniable competitive advantages, focused on satisfaction of demand for oil-refining and petrochemical products in key markets. The initial cost of the project is estimated at 659 billion rubles for the first and second stages, and 1.3 trillion rubles for full implementation. Taking into account the utmost importance of this project, we asked to consider the raising of its status to the priority one, and to approve the pack plan of the infrastructure construction for Eastern Petroleum Company in the Far East. We also asked to include all the necessary measures for government support into respective Federal Target Programs with specific requests to federal, regional, and local government authorities, as well as to natural monopoly entities. Implementation of Company projects on the shelf is impossible without modern Arctic and marine facilities, oil and gas platforms, other facilities, and sea-floor equipment. For example, only in the Kara Sea during peak years we will need up to 100 units of unique marine facilities and sea-crafts. In pursuance of your decision, Vladimir Vladimirovich, the consortium, which includes United Shipbuilding Corporation, Rosneft, Gazprombank, and Sovcomflot, is implementing the development project of the shipbuilding cluster in the Far East. As we have mentioned today, shipbuilding complex Zvezda in Bolshoy Kamen will become the core of this cluster. In addition to the above, the enterprise is to provide full construction cycle within the Russian Federation with local content of up to 70%. Thank you for your offer to assign the Far East Ship-Building Center as general customer for marine facilities. <…>

You know, actually, there is allocation of 16 gas carriers planned by NOVATEK, though Leonid Viktorovich doesn’t disclose the complete plan. They are the customers, as they sign a contract with Sovcomflot, and Sovcomflot orders 16 gas carriers under this contract, 300 million dollars each, which is almost 5 billion dollars. There’re also 13 gas carriers for Gazprom, and 6 tankers for Gazpromneft, which place an order for up to 10 billion dollars. If this order will be placed beyond the scope or independently from the Far East Ship-Building and Repair Center, we will not be able to either conduct negotiations, or to receive partial competence in work in cooperation, say, with shipyards of South Korea. The transfer of production and other facilities, navigation equipment, and partial receipt of competence is also possible here. Over the longer term, it will result in solution of a problem you set. 10 billion dollars allocated directly in South Korea make it almost impossible to build up civil order in the Far East, and receipt of additional competences for this center. The project becomes very tight. We hope to convince NOVATEK and Gazprom that this work shall be carried out through the Far East Ship-Building and Repair Center. Especially since Gazprombank is the part of this consortium, and even Valery Golubev reported that they entrust Gazprombank to represent the interests of the group in the consortium operation. Another…

Vladimir Putin: Valeriy Aleksandrovich took part in one of the meetings.

Igor Sechin: Another project I’d like to draw your attention to is the Far East LNG plant on Sakhalin. Current changes in the global energy market, that is technological development of liquid gas production, and its transportation turn the regional gas market into a global one. According to experts, Southeast Asia market is the most promising. It is being actively developed due to economic growth in China, India, and APAC countries. We should occupy a respectable niche here. The existing window of opportunities allows this, and within this framework, the Company implements the construction project of the Far East LNG plant on Sakhalin with a capacity of 5 million tons annually, and possible extension of up to 10 million tons to the second stage. It also includes seaport of LNG offloading and gas line connection to Sakhalin–2 system. Plant commissioning is scheduled for 2018–2019. Please note that one of the key factors influencing over economic attractiveness of the project is represented by gas shipment management extracted in the northern part of Sakhalin from our fields, and transported to the Far East LNG plant located in the Yeletsky port area, southwest of the island. In addition to the above, there has been created a Trans-Sakhalin pipeline system within the implemented Sakhalin–2 project, which includes a pipeline from north to south. Using free capacity, it can be with proper treatment headed by Gazprom to Sakhalin–2, and further to all the participants of the project. Unfortunately, we haven’t received any positive feedback yet. We also hope this will happen, and ask you to keep your eye out for support of our project. We are ready to provide all necessary specifications for pressure and gas quality, to carry out necessary Investorsments in order to provide vehicles of this plant with gas up to 8 billion cubic meters annually through the Sakhalin Energy pipeline since 2018–2019. We also ask to provide cooperation in obtaining access to free capacity of Sakhalin–2 project under economically viable terms.

Thanks for your time! This was brief overview of the new projects implemented by the Company in Eastern Siberia and in the Far East. We understand our responsibility for the implementation of these projects, their importance for the region and the country in general, and will do whatever it takes. Please include our requests into draft decisions.

Thank you very much.