Russia extends Kharyaga oil field PSA with Total to 2031

11/07/2018 09:49 Oil Market

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The Russian government is extending a production sharing agreement with France's Total for development of the Kharyaga oil field by 13 years to the end of 2031, in the latest sign that many Western majors' operations in Russia are continuing despite sanctions on the oil sector.

The PSA on Kharyaga was signed in 1995. A government order signed Saturday requests that energy minister Alexander Novak sign an extension which will be valid from January 1, 2019 to December 31, 2031.

 

Total did not provide immediate comment on the extension or its plans for the project.

 

Total holds a 20% stake in Kharyaga. Other shareholders in the project include operator Zarubezhneft, which holds a 40% stake, Norway's Equinor, which holds 30%, and Nenets Oil Company with 10%.

 

Since Western sanctions against Russia came into force in 2014, Total has reduced its stake in Kharyaga. In 2016 Total transferred a 20% stake and operatorship of the project to Zarubezhneft. This was not seen as linked to the sanctions, which did not target projects like Kharyaga, and focused instead on future production.

 

At the time Total said that "a more substantial role for Zarubezhneft alongside our continued involvement will allow us to extract maximum value from Kharyaga for many years to come."

 

Local media put the transfer down to Total failing to meet associated gas utilization targets at the project and delaying construction of a gas processing unit.

 

Total's other assets in Russia include an 18.9% stake in Novatek. It also holds a 20% stake in Novatek's Yamal LNG project, and a 49% stake in Novatek's Termokarstovoye gas and condensate field.

Source: spglobal.com

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