Russia's biggest hope to compete with US crude faces obstacles amid Western sanctions, even as a top Moscow oil exec says the project can ease the global energy crunch

·2 min read
Russia's President Vladimir Putin (R) and CEO of state-controlled Russian oil company Rosneft Igor Sechin (L) push the button launching a new oil terminal at the Black Sea port of Tuapse
AFP/Getty Images
  • Russia's Vostok Oil project may be the nation's biggest hope to boost production and compete with US crude.

  • But Western nations pulling cash and resources means the project could see years of delays, sources told the Wall Street Journal.

  • A top Russian oil exec compared the project to Noah's Ark, given its potential to ease the global energy crunch.

Russia's Vostok Oil in the Arctic may have the potential to ease the global energy crunch and challenge US light crude.

But as Western support and cash dry up due to sanctions, those ambitions could flounder and the project could face severe delays, the Wall Street Journal reports.

Last month, the head of state-run Rosneft Oil likened the project to Noah's Ark, claiming it could save the world. Vostok's easier-to-refine, premium crude could take on similarly light grades from the US and Middle Eastern.

It could also help boost Russian crude production, which mostly relies on older oil wells. And Russian President Vladimir Putin sees the project as a key development for the infrastructure in the remote northern region.

But at least two financial backers are pulling funding from the $180 billion project, while sanctions have prevented or delayed things like drilling equipment, tankers and software from reaching the area, sources told the Journal.

So even as Moscow continues to rake in profits from its oil and gas exports, sanctions will force the Vostok Oil project's key asset — known as the Payyakhskoye field — to launch by 2029, rather than the original goal of 2024, according to Rystad Energy.

"Any delays in one part of the huge supply chain involved in the project will lead to the delay of the whole project," Daria Melnik, senior analyst at Rystad Energy, told the Journal.

Since Moscow invaded Ukraine in February, top Western energy companies like BP, Exxon Mobil, and Halliburton have halted or slowed business operations in Russia.

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