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Wood Mackenzie: Energy takes centre stage at St Petersburg

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Oilfield Technology,

Energy stole the limelight at this year’s St Petersburg International Economic Forum, with a number of high-profile deals signed at the event.

  • Gazpromneft and Shell created the Meretoyakhaneftegaz joint venture, covering five blocks in West Siberia. The blocks comprise the two green fields, Tazovskoye and North Samburgskoye, the contingent West Yubileynoye field and the small Meretoyakhinskoye brownfield;
  • Gazpromneft, Shell and Repsol signed a memorandum of understanding (MoU) for the development of two remote blocks on the Gydan Peninsula;
  • OMV amended its agreement with Gazprom for the acquisition of a 24.98% stake in Achimov 4 and 5. The deal now incorporates a consideration of €905 million (US$1.1 billion);
  • OMV and Gazprom also signed an MoU covering co-operation in the LNG sector, including the construction of small-scale production capacity.

Michael Moynihan, director, Wood Mackenzie’s Russia upstream team, said: “We expect further deals to be signed in the wake of the forum – the sale of the remaining 10% of Arctic LNG-2, possibly to Japanese investors, is one to watch. Chinese state-owned companies CNPC and CNOOC signed sales and purchase agreements, which see them each take 10% stakes in Arctic LNG-2, at the forum on 7 June. “

He added: “Gazpromneft’s portfolio includes many challenging greenfield projects, from the Arctic offshore to East Siberia to hard-to-recover reserves in West Siberia. For example, Tazovskoye and North Samburgskoye have most of their reserves in the Achimov formation which requires advanced drilling technology. But the company is stretched and needs financial and technological support from partners to develop the assets.

“This is why Shell's entry to the Meretoyakhaneftegaz joint venture is so significant. The major brings strong financial and technical capability to the venture. Shell has a long history of co-operation with Gazpromneft at the Salym Petroleum Development joint venture and with Gazprom, Gazpromneft’s parent company, at Sakhalin-2 LNG. The agreement also offers Shell the opportunity to expand its presence in a country with a massive low-cost resource.

Christian Boermel, a senior research analyst in the Russia upstream team, said: “Gazpromneft’s new ventures with Shell and Repsol are a colourful basket of various assets, providing many opportunities for co-operation.

“For Shell, it's a further opportunity to cement their relationship with Gazpromneft.

“For Repsol, it's about expanding its foothold in Russia in partnership with Gazpromneft. Repsol and Gazpromneft are already linked up at the Ourinskoye discovery on the western edge of the West Siberian basin. The new joint venture now takes them north to under-explored territory.”

He added: “It was expected that OMV would progress its deal with Gazprom. Pending since 2015, the swap deal for Norwegian assets fell through in 2018 and both companies are keen to have this wrapped up before start-up in 2020. The LNG announcement is interesting as it moves beyond a gas production and pipeline export relationship.”

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