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23-26 April 2019 • Moscow • Crocus Expo

5 Russian oil & gas projects to watch in 2018

From now until 2025, Russia is planning to start 29 new oil & gas projects. Definitely flying in the face of sanctions, Russian majors aren’t afraid to spend big. Here, we list five must-see projects coming from the world’s largest oil producer.
5 Russian oil & gas projects to watch in 2018
If you’re wandering the level of cap-ex at play, remember: this is Russia. The nation never does things by halves. Gazprom alone is forecast to spend $160bn on projects on projects worldwide from now into the next decade.
The rest of the line-up of majors, including Rosneft, Lukoil, Novatek, and Tatneft, are ready to spend big too. Let’s take at some of their projects to watch in 2018 and beyond.

5 must-see Russian oil & gas projects

Russian gas pipeline in the Arctic

Arctic LNG 2
Cost: $25.5 billion
Timeframe: 2017-2023
Novatek, a new force in Russian gas production, is starting to emerge from Gazprom’s shadow. The Arctic is its playground, where it will be spending an estimated $47.6bn on LNG projects within the Arctic circle.
The company is already knee-deep in developing the $27bn Arctic LNG 1 development deep in the Yamal Peninsula, located in the Far North Now, it is pursuing full investment in its Arctic LNG 2 processing hub on the other side of the Ob Bay from LNG 1 in Murmansk.
Once fully operational, Arctic LNG 2 will be pumping out 18.3 million tons of liquid gas a year. Like many Russian sub-zero projects, this gas hub has attracted significant international investment. 
Total and CNPC each hold a 20% stake, while China’s Silk Road Fund owns a 9.9% share. Novatek’s controlling share comes to 50.1%. Russia’s no.2 gas company says it will secure full finances by 2019.
“Our plan is to create a major LNG production centre in the Russian Arctic zone that will rival Qatar, Australia and the United States,” Novatek CFO Mark Gyetvay told the Financial Times.
Arctic LNG 2 will ultimately be made up of three 6.6-million-ton capacity LNG trains. Production will use a gravity-based structure (GSB) offshore in the Ob Bay. 
Equipment needed will be built in Novatek’s Murmansk LNG construction centre – ready-made for those harsh Russian winters. The first train is expected to go live in 2023.

Laying pipe on Turkstream pipeline
Cost: $6 billion
Timeframe: 2014-2019
Gas exports to Europe are Gazprom’s speciality. Despite political tensions between Russia and the EU, the largest energy company in the world has been pushing ahead with the TurkStream pipeline. This offers new paths for Russian gas into its biggest international consumer, adding further European export capacity alongside the Nord Stream 1 and 2 pipelines.
According to Gazprom CEO Alexey Miller, the project reached 80% completion in June 2018. Contractor Allseas has been responsible for handling construction of TurkStream, something it began with the laying of the first offshore section in Russia’s Black Sea territories in May 2017.
At its peak, the 910km offshore route, connected to 180km of onshore pipeline at Kıyıköy in Northwestern Turkey, will be carrying billions of cubic metres of gas. Per year, TurkStream’s full capacity stands at 31.5bn cubic metres (m3). 
Turkey alone is expected to consume almost half of TurkStream supplies at about 15.75bn m3. The remaining gas is expected to reach Europe via Greece and further pipeline construction projects.
If the schedule continues its rapid pace, Russian gas will be reaching Europe via the Black Sea by December 2019.
Rakuschechnoye Field development

Oil Rig in the Caspian Sea
Cost: N/A
Timeframe: 2017-2023
The Caspian Sea is rich with hydrocarbons, but is bordered by five countries, including Russia. Its regional partners, Azerbaijan, Kazakhstan, Iran, and Turkmenistan, are all keen to tap into the Caspian’s mineral wealth. 
With the unprecedented block agreement dividing the Caspian’s waters in August 2018, regional E&P activity is set to heat up in a politically neutral zone.
Lukoil is already planning its next phase of its Caspian activity by developing its share of the rich Rakuschechnoye oil field. Discovered in 2001, Rakuschechnoye holds up to 39 million tons of oil alongside 33 billion cubic metres of natural gas.
Importantly for Lukoil, it lies just 8.5km from the Vladmir Filanovsky field it is currently developing. That means, with careful pipeline planning, Lukoil could essentially combine the two fields into one mega-field for more efficient production.
At Rakuschechnoye, Lukoil has made its final infrastructure decision. Planned for construction are a fixed offshore ice-resistant platform, a dedicated living quarters platform, a crossover bridge, plus subsea interfiled pipelines and cable lines, connecting this rig to the V. Filanovsky project.
Drilling and construction work is only just entering the planning stages. Lukoil has outlined a commercial production start date of 2023. Once up and running, Rakuschechnoye’s oil production plateau will flat out at 1.2 million tons annually.
Nord Stream 2

Pipes for the Nord Stream 2 pipeline
Cost: $9 billion
Timeframe: 2016-2019
Activity on Russia’s most controversial pipeline shows no signs of slowing, despite sanction’s biting into Russian oil & gas. 
The second Nord Stream pipe is indicative of increased Russian gas exports to Europe, which rose by a stunning 30bn m3 in 2017. Impressive? Sure, it netted Russian gas producers $37bn in revenues too.
Nord Stream 2 has not been without its difficulties. The original route had to be altered in order to circumvent Danish waters after the Scandinavian nation protested Russian influence in its seas. Now, Nord Stream 2 essentially mirrors its older brother.
The only key difference is 2 starts in Vyborg, north of St. Petersburg. Nord Stream 1 begins on the southern side of Russia’s section of the Gulf of Finland, below the nation’s second city at Ust-Luga.
Construction permits have been acquired according to project majority shareholders Gazprom.
“Preparatory works are ongoing in the four countries in which Nord Stream 2 has permits,” a Gazprom spokesman told the Financial Times. “The pipelay activities in deep waters of the Baltic Sea will be started soon.”
In particular, pipework has begun in Germany’s Lubmin area. Nord Stream 2 will terminate in a transmission statement located at Griefswald on the north German coast.
Once the gas starts flowing, Nord Stream 2 will have added a jaw-dropping 55 billion cubic metres of gas to Russia’s export capacity. Given Europe’s hunger for natural gas, it’s a shrewd move from Russia to push ahead with this pipeline.
EU gas demand grew 5.9% in 2017. According to BP, this will only rise further. By 2040, BP is predicting the EU will rely on 89% imported products to satiate gas demand. The share of natural gas in its energy mix is also expected to rise from 24% to 27% during this time too.
Russian West Arctic E&P

Oil rig in the Arctic under the Northern Lights
Cost: N/A
Timeframe: 2018-ongoing
The future of Russian energy lies in the Arctic. Much of this will take part in the Western Arctic, where Arctic LNG 2 is located for example. That means Russian firms can draw upon their partners’ unique expertise in sub-zero temperatures.
We can see the Arctic’s potential in Rosneft’s license blocks. The company alone holds 19 license blocks for exploration across Wester Arctic seas. These are:
7 areas in the Barents Sea - Fedynsky, Central Barentsумылн, Perseyevsky, Albanovsky, Varnek, West Prinovozemelsky, Gusinozemelsky
8 areas in the Pechora Sea - Russky, South Russky, Medynsko-Varandeysky, South Prinovozemelsky, West Matveyevsky, North Pomorsky -1, 2, Pomorsky
4 areas in the Kara Sea - East Prinovozemelskie-1, 2, 3, North Karsky
Lying beneath the surface lies at least 17.3bn tons of total extractable oil and natural gas. 
Sanctions have affected this activity, however. ExxonMobil has pulled out of some of its joint ventures in the light of ongoing political tussles between Russia and the US. This hasn’t stopped companies like Eni or Statoil from pursuing their joint Arctic interests with Rosneft.
Statoil, for instance, has been drilling alongside Rosneft in the Severo-Komsomolsky license area since 2012. After initial geo-imaging and exploratory work, estimated resource totals there have doubled original estimates. Projected gas and oil reserves at Severo-Komsomolsky now float around 111 million tons.
With Russia’s Arctic ambitions comes a very real need to start developing, or begin buying, extreme-weather resistant equipment. We are talking cold-resistant jacks, rigs, subsea umbillicals, and so on.
Sanctions will lower Russian access to this technology, but with options like localised equipment manufacturing worth exploring, there are lots of avenues open to suppliers in the current climate.
Discover those at MIOGE 2019.

MIOGE 2019: Russia’s no.1 international oil & gas equipment exhibition

The Moscow International Oil & Gas Exhibition is the meeting place for the international community and Russia’s oil & gas industry. Over 560 companies trust the show to let them meet and do business with representatives from across the value chain.
Here, you’ll meet the players behind the Russian oil & gas projects listed above, as well as getting details on Russia’s project landscape from to 2025 and beyond. 
Find procurement, engineering and purchasing specialists exclusively at MIOGE.
Russian majors, including Gazprom, Tatneft, Rosneft and Lukoil, attend the show every year. Why? To meet new partners and suppliers of in-demand oil & gas equipment and technology.
To reserve a stand, click here.
Want more information on how MIOGE can help grow your business in Russia’s enormous oil & gas industry? Contact our team today.