Rosneft, Nornickel Reach Deal on Controversial Gas Asset

Rosneft was able to convince Norilsk Nickel of the need to play the Turkovsky block in the Krasnoyarsk Territory, including the Ushakovskoye field, at an auction. Previously, Norilsk Nickel wanted to reserve the deposit for supplying the Norilsk industrial region. According to the agreements, Rosneft, in the event of winning the auction, has undertaken to supply gas to Norilsk Nickel if the company runs into a deficit. In addition, Rosneft will supply 124 thousand tons of oil products to Norilsk Nickel this winter, Kommersant reported.

Norilsk Nickel supported Rosneft’s proposal to hold an auction for the Turkovsky area (includes the Ushakovskoye field; reserves – 54 billion cubic meters) with the inclusion of special conditions requested by the oil company, it said. Thus, Rosneft suggested that the auction participant should already have production in the Krasnoyarsk Territory, and the gas produced from the field should be exported using Russian-built gas carriers along the Northern Sea Route. Norilsk Nickel and Rosneft sent a corresponding joint appeal to the Ministry of Natural Resources.

Earlier in July, Norilsk Nickel sent a letter to the Ministry of Natural Resources, in which it asked to reserve the Ushakovskoye deposit for its own needs.

Now Rosneft has undertaken to provide Norilsk Nickel with the missing volumes of gas in case of obtaining a license for the Ushakovskoye field.

In addition to the Turkovsky block, Rosneft asked to license two more blocks under special conditions – the Deryabinsky block and the subsoil block including the Kazantsevskoye field.

The reserves of the three sites are estimated at 128 billion cubic meters; Rosneft wants to include them in Vostok Oil — a joint project with Eduard Khudainatov’s Neftegazholding — and produce LNG.

The Ministry of Natural Resources supported the licensing of two sites (except for the Turkovsky), however, as Kommersant reported on July 28, the ministry’s report did not contain a position on the inclusion of special conditions in the auctions; the Ushakovskoye field was planned to be reserved for gasification of the Norilsk industrial region.

In turn, the Federal Antimonopoly Service and the Ministry of Economy opposed the exceptional conditions for trading. At the same time, according to the Ministry of Natural Resources, LUKOIL is also showing interest in the sites, but it will not be able to participate in the auction if there are special conditions.

In addition to the issue of the Ushakovskoye field, Rosneft and Norilsk Nickel also agreed on the supply of oil products in winter, in contrast to the usual practice when fuel is brought to Norilsk during summer navigation.

Norilsk Nickel plans to ensure supplies with its vessels of reinforced ice class. Thus, from October 2020 to April 2021, Rosneft will supply up to 123.9 thousand tons of oil products to the mining and metallurgical enterprises located in the Norilsk industrial region.

Deliveries will be carried out along the Northern Sea Route by tankers to Norilsk Nickel with transshipment through the facilities of the Arkhangelsknefteprodukt terminal (structure of Rosneft).

“This work, among other things, will make it possible to free up a significant part of the MMC’s tank farm located in the region for conducting a comprehensive survey, modernizing infrastructure and taking measures necessary to improve the reliability of the fuel storage system,” the statement said.

As a reminder, on May 29, the largest leak of diesel fuel from one of the tanks occurred in Norilsk.