FSUOGM: Rosneft starts drilling at Vostok Oil

Russia’s state oil company Rosneft has kicked off production drilling at the Payakhskoye oilfield in the Russian Arctic – the largest deposit in the Vostok Oil megaproject.

Development drilling is taking place at five well pads at the field, and will be completed using Russian-made rigs, Rosneft said. With lifting capacities of 400 tonnes, these rigs are capable of drilling wells up to 6,000 metres in length, the company said, noting it planned to deploy 100 such rigs during the course of Vostok Oil’s development.

Rosneft also said it had started building an oil terminal at the port of Sever Bay, where Vostok Oil’s production will be shipped to market, as well as cargo berths for ships. Oil from the project will reach Vostok Oil via a 770-km pipeline. Initially the terminal will handle 30mn tonnes per year (600,000 bpd) of crude, rising to 2mn bpd by 2030. The company has also delivered 545 residential modules to the project site, it said.

Vostok Oil, operated by state-owned Rosneft, comprises several large-sized oilfields in Russia’s far north that hold a combined 6bn tonnes (44bn barrels) of oil and substantial gas reserves. Rosneft says this is enough to support 2mn barrels per day (bpd) of oil production eventually, and as much as 50mn tonnes per year (tpy) of LNG. The primary target market for these supplies is Asia.

There are questions about whether Rosneft has the financial resources and technical capabilities to see the project through, in light of Western sanctions and the departure of many international financiers, contractors and equipment suppliers from the Russian oil sector. 

Global commodity trader Trafigura revealed in mid-July it had sold its 10% stake in Vostok Oil which it had acquired in December 2022, after committing to leave Russia after Moscow began its invasion of Ukraine.

If you’d like to read more about the key events shaping the former Soviet Union’s oil and gas sector then please click here for NewsBase’s FSU Monitor.