It seems that the head of Rosneft, Igor Sechin, is only thinking about someone who can buy the assets of the Vostok Oil project, which currently exists only on paper. The project is on paper, but the deposits and companies with licenses for mining are quite real. And Sechin's "friends" too.
And now, as the correspondent of The Moscow Post reports, Sechin is negotiating with the largest international oil traders — Vitol, Glencore and Gunvor about attracting investment to his Arctic project. And investments involve "quid pro quo" — we are talking about the transfer of part of state assets to companies (after all, Rosneft is a state-owned company), in exchange for money that may not go to the project and the treasury as taxes.
Similarly Sechin offers investors to invest in exchange for a share in the project, he uses public money to buy back those assets that Vostok Oil, in his opinion, lacks. And these funds appear to be owned by people, who are close to Sechin. And sometimes the same assets are added to the funds — once again, state-owned.
Recently it became known that the Independent Oil and Gas Company (NNK) of the former head of Rosneft Eduard Khudainatov received large production assets from the state company — Varyeganneftegaz and Nizhnevartovsk Oil and Gas Production Enterprise.
Their transfer is provided for by an agreement under which Rosneft received the Payakhskoye field from NNC. As a result, NNK production may increase sixfold, exceeding 12 million tons of oil per year. The total value of assets can reach $3-4 billion. But earlier, Rosneft had already bought the Payakhskoye field — for money, and the amount was not disclosed.
At the same time, Rosneft stated that it intended to sell a number of its old production assets to NNK, which the company considers less promising. Apparently, it's about them. Why not promising — $3-4 billion? But the question is, what right does Sechin have to just "juggle" state assets for such an amount?
Moreover, many experts suggest that Sechin himself may keep real control over the assets. After all, he worked with Khudainatov for many years, detractors even call the latter "Sechin's Avatar" behind his back. It is very convenient — for the purpose of a paper project, transferring state assets to close people, removing them from state ownership, and keeping control personally? Could this option have been implemented?
While "Vostok Oil" exists only on paper, money and assets that Sechin "juggles" are quite real
Returning to Rosneft's offer regarding Vitol, Glencore and Gunvor. These names, some of which, if not all, may have been used in the past to hide the influential oligarch Gennady Timchenko, are not accidental. All these traders actively worked with Rosneft both before and after 2014, which means they could provide support in circumventing Western sanctions by the company. Did Sechin decide to share with Gennady Timchenko or his people?
Since the sanctions are absolutely illegal and baseless, they could be thanked. But on what basis do such friendship and cooperation become a reason for entering into large state projects of the Russian Federation with a possible transfer of assets and an uncertain amount of investment? To keep the assets closer to Sechin's heart, as it happened in the case of Eduard Khudainatov's company?
Even before that, in December 2020, Rosneft offered to engage in joint projects with another structure, Equinor. The company is also well-known — it has been operating in Russia since 2012. Earlier, together with Rosneft, it received the right to develop the northern oil shelf.
Billions were poured into the project, but it turned out to be a failure. As a result, only two wells were drilled in 2016, the reserves in which were recognized as commercially uninteresting. Now Sechin has come up with a new joint venture, which can then get a stake in Vostok Oil.
The situation is even more piquant, because 67% of Equinor is owned by the Norwegian Government. Does Sechin want to share control of strategic assets with a foreign state? In addition, it was actively working in America, and those affairs can give an idea of how much reliable investor is invited to cooperate by Igor Ivanovich.
Since 2008, Equinor has developed the largest Bakken and Marcellus/Utica shale formations in the United States. This is 300 thousand barrels of crude oil equivalent. And suddenly, in 2020, the structure easily reduces investments in American projects by 20%. Instead of the announced $10-11 billion, it will invest only $8.5 billion, as well as reduce exploration costs by $400 million, operating costs by $700 million. Will Sechin guarantee that, having received a share in Vostok Oil, Equinor will invest in it at all?
It's the same with another oil trading company, Trafigura from Singapore. Back in November 2020, the Board of Directors of Rosneft approved the sale of its 10% stake in Vostok Oil LLC. And also, apparently, not in vain. According to rumours, the company could have helped Rosneft circumvent Western sanctions for many years, for which Sechin is probably very grateful.
But there are a lot of scandals associated with this company. According to the Prime publication, in 2018, the Venezuelan PDVSA oil state corporation, among other companies, accused Trafigura of corruption. Allegedly, a criminal case was even initiated in Switzerland on these charges.
The essence of the charges could be the obtaining of confidential market information in exchange for corrupt benefits. What, then, is the basis of the strong friendship between Rosneft and Trafigura over the past five years?
Another scandal concerning Trafigura was developing recently in Brazil. According to the author named historian19 on the LiveJournal platform, Trafigura and Vitol allegedly paid millions of dollars in bribes to employees of the Brazilian Petróleo Brasileiro SA in exchange for more favourable terms for concluding trade contracts.
Sechin continues on, offering shares to more and more new players. Earlier, Rosneft offered a consortium of Indian state-owned companies, which owns 49.9% in the Vankor field, to contribute this asset to the Vostok Oil project in exchange for a minority stake in it. This was written by Kommersant. And it's not that hard to understand.
It's all about the cost of the Vostok Oil project in Taimyr. For a long time, top managers of Rosneft only drew beautiful pictures, without naming the amount that needs to be invested in the project to make it work as beautifully as Sechin speaks about it. What can be said, it is not clear whether it will work at all.
The first phase of the project with a capacity of 50 million tons per year should be completed only in 2024, but the discussion of the parametres, resembling milling the wind, has been going on for two years. The second stage, which will increase production to 100 million tons annually — approximately by 2030. And it will need, as the Znak wrote, about 10 trillion rubles.
Huge amount of money. But it turns out that 1 trillion of them is to go to a foreign trader, that is, to Trafigura? These 10 trillion rubles within Russia itself could completely solve the problem of shabby and dilapidated housing, build more than 60 thousand km of high-class roads, build hospitals, schools, and help businesses in a crisis period.
By generously changing, buying and selling state assets, Sechin wants to distract the state's attention from the failures of Rosneft itself?
But Igor Ivanovich doesn't seem to be too worried about it. After all, the money is state-owned. At the same time, Rosneft itself is in a serious crisis. In the first half of 2020, its net loss to Rosneft amounted to 113 billion rubles against a profit of 325 billion rubles a year earlier. This is written by RBC. In April 2021, we will know the result for the year as a whole — and there will be little positive for Sechin, this is already clear.
May the active fidgeting on the topic of Vostok Oil and respected international partners in the oil market be exactly due to the fact that Sechin does not have much success of his own? So is the only thing left to draw beautiful pictures in front of the management, pushing the input of the first stage to 2024 — and there, perhaps, the project will quietly "shade", the assets will remain with whom it is necessary, and everyone will quietly forget everything?