EDITOR: | November 25th, 2016

Canadian investors eye huge investments in Russian oil industry

| November 25, 2016 | No Comments
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GenOil Inc., the Canadian provider of hydroconversion fixed bed technology for upstream and downstream oil and gas industry, has announced its plans to invest up to US$10 billion in the implementation of projects in the field of oil production and refining in Russia, and in particular in the Chechnya Republic.

To date, the company has already signed an agreement with Grozneft, the largest oil producer in Chechnya, for the investing of funds in establishment of infrastructure at oil fields in Russia.

It is planned that the majority of funds for the project will be provided by Chinese investors and banks.

According to Andrei Gusak, Chairman of Grozneft, in addition to production infrastructure, part of the funds will be invested in the establishment of a refinery in the region, with the capacity of 6 million tonnes of oil per year.

The majority of future oil, that will be produced at Chechnya, will be supplied to the Russian market, however part of the production will be also exported to abroad, and in particular to Kazakhstan and the countries of the Caucasus region.

During the Soviet times the Chechnya Republic was one of the largest oil-producing regions in the USSR, with the annual volume of production 30 million tonnes of oil per year. However the production fell to 3-4 million tonnes at the beginning of the 1990s.

In the meantime, according to some sources close to the Russian Ministry of Energy, the Chechnya Republic can not be the only region in Russia, the expansion in which could be of interest to GenOil. An interest of the company may be also related with the Bashkorotostan republic, the region in the Russian Urals, which is characterized by the existing several large hard-to develop oil fields of the Bazhenov Formation, as well as the Russian continental shelf.

In the case of shelf, at present the majority of projects, which involve the production of oil at the Russian Arctics shelf are frozen, due to the existing Western sanctions and the lack of technologies for its development in Russia. In addition, the decline of global oil prices have made the majority of shelf projects unprofitable for the development for their investors, including for Russian state-owned oil producer Rosneft, which have exclusive rights on the production of oil at the Russian continental shelf.

Analysts of the Russian Ministry of Energy believe that partners may face with the problems during the sale of their products, taking into the existing excessive refining capacities in Russia at present.

Founded in 1998, GenOil currently has a technology of the processing of heavy oil in high-quality petroleum products. The company has experience of cooperation with some Russian leading oil producers, and in particular Lukoil. In 2004 the companies signed an agreement on the research of the composition and properties of oil, which is produced at Yaregskoye oil field in Russia.


Eugene Gerden

Editor:

Eugene Gerden is an international free-lance writer, based in St. Petersburg, who specializes on writing in the field of mining, metals and rare earth metals. ... <Read more about Eugene Gerden>


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