ROSNEFT TEMPTS TRADING HOUSES TO JOIN ITS ARCTIC OIL PROJECT

Russian state oil major Rosneft is courting investments from global trading houses to help develop one of the world’s biggest oil deposits, after talks with other possible partners stalled following a collapse in oil prices, four sources told Reuters.

Rosneft is in discussions with Vitol, Glencore and Gunvor, among others, over investments in its Vostok Oil project in the Arctic, having already secured a deal with Swiss-based Trafigura, which took a 10% stake at the end of last year, Olga Yagova and Dmitry Zhdannikov reported for Reuters.

Trading houses generally avoid investing directly in production, but the Rosneft deal may be attractive as it could give them access to a long-term major source of supply for the growing Asian market.

“Involving oil traders in the project makes sense because they are essentially buying exposure on future oil supply,” a source close to talks with potential investors told Reuters.

Neither Rosneft nor the trading houses had any comment to make on the talks.

Vostok Oil is one of Russia’s biggest oil projects, comparable in size with the exploration of West Siberia in the 1970s or the US Bakken oil province over the past decade.

Rosneft has estimated its resources at 44 billion barrels, enough to supply the world for over a year, and said it could produce 1% of global oil later this decade at a price competitive with the cheap barrels of Middle Eastern producers.

Vostok will require vast investments in new pipelines, roads and other infrastructure in East Siberia and the Arctic, with oil to be shipped to Asia via the Northern Sea route.

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