Russia's Rosneft has identified a group of alternative investors for its $100 billion Vostok Oil greenfield project in East Siberia after failing to draw interest from Western oil majors.
According to Rosneft, it has signed an agreement with a consortium comprising international commodity trader Vitol and Mercantile & Maritime Energy, a subsidiary of Singaporean trader Mercantile & Maritime, to sell a 5% stake in Vostok Oil.
The deal will close after all participants obtain the necessary regulatory and corporate approvals, Rosneft said.
Rosneft did not disclose the terms of the sale that, according to industry observers, may include conditions around its long-term commitments to deliver a pre-agreed volume of oil and products to both companies for re-sale on international markets, supporting their trading and shipping business.
Rosneft is currently the largest supplier of Russian oil to the Asia-Pacific region via the East Siberia–Pacific Ocean oil pipeline, which runs to China and the Kozmino marine export terminal in Russia's far east.
While the the value of the 5% stake in Vostok Oil is has not been disclosed, in December Rosneft agreed to sell a 10% stake in the project to international commodity trader Trafigura for €7 billion ($8.4 billion).
However, out of this amount, Trafigura paid just €1.4 billion, with the remaining amount arranged as a loan from a consortium of Russian banks, led by Moskovsky Kreditny Bank.
Vostok Oil promotion
Rosneft has said that Vostok Oil should be considered a world-class investment opportunity, with low production costs and carbon dioxide emissions estimated to be just one quarter of those at other similar greenfield projects around the world.
Additionally, Rosneft said that oil to be produced and exported by Vostok Oil will have an extremely low sulphur content, further reducing the projects's environmental impact.
Rosneft said it is stepping up efforts to bring online the remote deposits in East Siberia's Krasnoyarsk region, which could produce oil as early as 2024.
Just this month, the company signed more than 50 contracts with suppliers and contractors for a total of 559 billion rubles ($7.45 billion), including pipe deliveries from Russia's largest pipe mill TMK and energy supplies, it said.
Meanwhile, Rosneft is trying to counter criticism of the project and the company’s corporate policies at home, filing eight appeals in local arbitration courts this year targeting independent analysts and media that quoted their comments on the problems that Vostok Oil is facing.
Rosneft has reportedly argued in its appeals that such criticism undermines its efforts to attract investors and arrange loans for Vostok Oil and the company itself.