London: Western sanctions against Russia may cause Rosneft to delay start-up of its Sakhalin LNG plant by at least two years.
A source at Rosneft told Bloomberg the plant would probably be postponed “for three to five years”; another source guessed at a two-year delay.
Sanctions have impeded the firm’s ability to secure financing for the project, and the dramatic drop in fuel prices since the development was agreed have made the plant economically unviable for the time being.
Rosneft signed an agreement with Exxon in 2013 to develop the plant in Russia’s Far East, which aimed to produce 5m tpa of LNG from 2018.
The LNG plant will be partly fed from gas produced at Sakhalin-1, an oil and gas project in which Exxon is a major investor.
A Rosneft company spokesman told Reuters there had been no change to the project’s timeline: “Rosneft has not revised the terms for the implementation of the far east LNG project.”
Rosneft has been struggling financially ever since trade sanctions were imposed on Russia last year in the wake of its occupation of Crimea, Ukraine.
The energy producer has record debts of R2.47tr ($44bn), and has requested a R1.3tr loan from Russia’s National Wealth fund to help finance various projects. The firm needs to cover around $16bn in payments to Western banks this year, reports say.