Rosneft has received FAS permission to buy a controlling stake in “Pechora LNG”. Eighteen months after it signed an agreement with Alltech Inc, which owns the asset, Rosneft was able to negotiate with the owner of Altech over the price following the further devaluation of the rouble and persistently low price of oil. However, even after the stake has been acquired, Rosneft will not be able to export LNG from Pechora because of the legal limitations of the December 2013 law aimed at ‘liberalising’ LNG exports. Currently, Rosneft is only legally permitted to export LNG from their offshore fields, which the company argues limits the independence of LNG producers who do not have access to the unified gas supply system. But there are arguably some more fundamental problems — analysts are questioning the progress that can be made on this project as a result of low oil prices and sanctions.
Rosneft announced the joint construction of the Pechora LNG plant with Altech in the Nenets region in the summer of 2014. However, the deal was not completed until November 2015 because the parties could not agree on the price to be paid by Rosneft. Now, given the fall in oil prices, Altech has accepted a lower price than originally asked for, according to Kommersant.
Andrey Polischuk from Raiffeisenbank believes that it now makes no sense for companies to invest significant resources in major new projects due to falling oil prices and lack of movement in the law granting permission to export LNG. In addition, according to Polischuk, Rosneft will have to find itself one or more partners in order to ensure the ultimate completion of Pechora LNG. This task has been made more challenging following the recent extension of US financial sanctions. Novatek has failed to secure project financing for its LNG plant on the Yamal Peninsula after having been placed on the sanctions list.