Gazprom Neft in talks with European refineries over Arctic crude supplies

Moscow (Platts)--5 Feb 2014 813 am EST/1313 GMT

Russia's Gazprom Neft, the oil arm of gas giant Gazprom, plans to sell crude oil from its Arctic Prirazlomnoye field in the spot market in the near future and later reach long-term supply contracts with European refineries, first deputy CEO Vadim Yakovlev said Wednesday at a media briefing.

"First, we will trade the crude on the spot market and later expect to form a pool of buyers, for example, refineries from north-western Europe, the Netherlands, Norway, the UK," he said.

Supply talks are already underway with a number of European downstream companies, Yakovlev added.

"The sulfur content and the density [of crude from Prirazlomnoye] is higher than that of Urals so we expected it to be traded at a certain discount to Urals," he said.

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First crude loading from Prirazlomnoye is planned for the first quarter with the volumes to be delivered directly to the Dutch port of Rotterdam, he said.

This year, Gazprom Neft plans to load one tanker per quarter with Prirazlomnoye crude, he said.

"As production volumes at the field grow, we will look into sending crude to a storage facility so that the two dedicated ice-class tankers could deliver the volumes to consumers faster," Yakovlev said.

Earlier, company officials said crude from Prirazlomnoye could be sent to Rosneft's Belokamenka floating storage facility near the port of Murmansk before reaching European refineries.

Gazprom Neft currently retains its 2014 production target for Prirazlomnoye at 300,000 mt, or an average of 6,000 b/d, Yakovlev said.

Gazprom Neft began production at Prirazlomnoye in late December.

In mid-September, the Arctic field became the site of the Greenpeace protest that led to the arrest of 28 activists and two journalists.

Russia subsequently charged all 30 crew members aboard Greenpeace's Arctic Sunrise ship with piracy, with potential prison terms of up to 15 years.

In December, Russian lawmakers approved a Kremlin-backed amnesty bill to end the prosecution of the activists.

Greenpeace believes oil producers do not have sufficient expertise to handle potential large-scale spills in the fragile Arctic environment.

--Dina Khrennikova,
--Edited by Jeremy Lovell,

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