Russian state subsurface agency Rosnedra has unveiled a plan to auction an exploration and development licence for a gas block in the core gas-producing Yamal Peninsula in West Siberia as it spies fresh interest from local companies willing to take exploration risks after a tough 2020 for the industry.
The East Bovanenkovo block in the central part of the peninsula may be of interest to state-controlled gas monopoly Gazprom and independent gas producer Novatek, as both companies have tracts under development in the vicinity.
According to Rosnedra, the acreage contains confirmed gas reserves of about 20 billion cubic metres following the drilling of a successful exploration well on the acreage in 1983.
Possible in-place resources at the track are assessed at about 370 billion cubic metres of gas and some oil and condensate.
Rosnedra will accept applications to participate in the auction until 12 March, with the auction to be held on 30 March.
According to the agency, the East Bovanenkovo block is located between the largest onshore gas field on the Yamal Peninsula, Bovanenkovo, which is operated by Gazprom, and the Upper Tiuteyskoye and the West Seyakhinskoye gas deposits.
These two smaller deposits are currently being developed to provide gas to Novatek-led Obsky LNG project that is expected to come onstream in 2025.
Excessive Yamal gas shipping capacity
Both companies are expected to be interested in the East Bovanenkovo block as they have excessive capacity to handle additional gas volumes.
Gazprom is currently building a third leg of the Bovanenkovo–Ukhta–Torzhok domestic trunkline to ship gas from its fields on the Yamal Peninsula while Novatek has proved to achieve quick success in raising processing ability of three trains at its Yamal LNG well above its nameplate capacity.
Novatek also expects a fourth train at Yamal LNG to come online before the end of the first quarter of this year after repeated commissioning delays.
Rosnedra said that Russian fertiliser producer Novokhim holds a licence for a third gas block in vicinity, Malotambeysky. However, industry analysts do not expect the company to be financially capable of competing with Gazprom and Novatek for the East Bovanenkovo licence.
Vostok Oil portfolio addition
According to Moscow-based news agency Interfax, Rosnedra has also said that another large oil and gas block in East Siberia, Baykalovsky, changed its owner earlier this year.
The licence for the block had been in hands of Russia's largest oil producer, Rosneft, since 2004. In 2018, exploration of the asset was picked up by Yermak Neftegaz, a joint venture between Rosneft and UK supermajor BP.
The exploration and development licence for the Baykalovsky block has now been transferred to Vostok Oil, a joint venture between Rosneft and international commodity trader Trafigura.
Rosneft has remained upbeat about prospects of Vostok Oil despite its huge multibillion-dollar costs, the lack of supporting and transportation infrastructure in East Siberia and the need to continue large scale exploration efforts to confirm proclaimed huge reserves of its blocks.