Russia is planning to auction 17 state-held oil and gas blocks located in its core hydrocarbon province of West Siberia, in September and October.

A total of 20 five-year exploration and development licences for seven blocks are scheduled to be auctioned in the Yamal-Nenets region, which hosts mostly gas deposits exploited by Gazprom, Novatek and Rosneft.

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The authorities hope they will be able to sell similar licences for 10 tracts in the neighbouring Khanty-Mansiysk region, which hosts oilfields operated by Russia's major producers.

The Khanty-Mansiysk blocks are significantly smaller than those offered in Yamal-Nenets, with authorities having failed to find investors for several tracts for years because of their remote location and lack of confirmed reserves.

One asset — Salymsky 6 — was returned to the state in 2017 when Spain’s Repsol decided not to proceed with exploration drilling after acquiring seismic data on the acreage.

Novatek in front seat

However, the fate of at least two Yamal-Nenets blocks has already been determined, with authorities having agreed to restrict potential bidders to Russia’s largest independent gas producer Novatek and its wholly owned subsidiaries.

These tracts contain two discovered fields — Arkticheskoye and Neytinskoye — which hold combined estimated confirmed and potential resources of over 670 billion cubic metres of natural gas.

Novatek had earlier petitioned the government for the acreage, arguing that the two blocks, covering a total area of 3500 square kilometres, fit well with the company's long-term plan to commercialise gas resources on the Yamal and Gydan Peninsulas by exporting volumes as liquefied natural gas to international markets.

Russian authorities said they will be ready to award licences for the two tracts hosting the Arkticheskoye and Neytinskoye fields to Novatek for a total payment of almost 12 billion roubles ($159 million).

Starting bids for other Yamal-Nenets blocks are significantly lower, with the next highest being 957 million roubles for the North Kharasaveysky block.

Gazprom in sight

The authorities hope that North Kharasaveysky will attract bids from Novatek and Gazprom at least, as it borders the East Bovanenkovsky block licensed to Gazprom and two blocks that are to be developed by a local subsidiary of Novatek.

However, four earlier exploration wells drilled at North Kharasaveysky failed to discover commercial hydrocarbon reserves.

Another potentially valuable asset for Gazprom, and possibly Novatek, is the East Malyginsky block in the northeast of the Yamal Peninsula, to which authorities have attached an initial price tag of 487 million roubles.

The acreage lies adjacent to the Malyginskoye gas field that Gazprom wants to develop in synergy with three large neighbouring Tambey tracts to provide feedstock gas for a planned multi-billion dollar project comprising a large LNG plant and a polymer and chemical facility near the Baltic port of Ust-Luga.

Tambey rush

Novatek has repeatedly attempted to take these tracts from Gazprom to include them in its own LNG schemes, claiming that the state gas giant has been procrastinating for years about their development.

Earlier this week, Russian privately held investor RusGazDobycha said it is finalising an earlier agreement with Gazprom to speed up development of the Tambey tracts, with the aim of creating a joint venture for this purpose before the end of the year.

The 50:50 venture aims to start gas production at Tambey in 2026.

However, the joint venture has to solve the major issue of transporting ethane-rich gas thousands kilometres to Ust-Luga without commingling it with other gas in the transmission network to support its polymer and chemical ambitions.