Northern allowance

The authorities will spend more than 10 trillion rubles for the Sechin project for oil and gas production in the Arctic

Last week, President Vladimir Putin met with the head of the Rosneft oil company Igor Sechin to discuss the largest domestic industrial project Vostok-Oil. The cost of the Vostok-Oil is declared as “more than 10 trillion rubles”. In foreign terms, it is designed as $ 70–115 billion (however, according to The Nikkei Asian Review, the implementation of the project will require no less than $ 157 billion).

We hope that “more than 10 trillion” will still be closer to $ 115 billion, which is to $ 70 billion. By the way, given that the first phase of the project with a capacity of 50 million tons per year should be completed in 2024, and the second, which will increase the production to 100 million tons annually, can be calculated by 2030, a certain average course, which the authorities laid down for the period until 2030.

It is important to note that “more than 10 trillion” is not “10 trillion and 100 billion”, but 11–12 trillion rubles. Thus, we see that the average government of the ruble has the average for the coming decade in the region of 100 rubles per dollar.

Since at the beginning of the journey it is 76 rubles, on average in a decade - about 100 rubles, it turns out that at the end of the decade, the dollar exchange rate will grow to 120-130 rubles.

This is a somewhat rude calculation, which does not take into account the fact that the main share of costs is most likely to be at the first place of the project - to raise from “zero”, especially in the Arctic, it is always more difficult than working with the finished base, which will give the first stage.

Now let's look at these 10 trillion on the other hand - thinking that the country could get for this money if they were aimed at something else. According to the latest available data from the Ministry of Transport, the average cost of building one kilometer of one lane of road of the 1st category in 2017 amounted to 39 million rubles.

Suppose that over the past three years, the construction cost has doubled and now amounts to 80 million rubles. Consequently, a kilometer of a two-lane road is quite good quality (after all, we are talking about the 1st category, there are five of them) will cost 160 million rubles. That is, having spent 10 trillion, you can build almost 63,000 km of a good asphalt highway.

Is it a lot or little? Let me remind you that the length of the Moscow -Sanct -Petersburg highway is 684 km, and the distance between the capital and the main resort of the country, the city of Sochi, is only a little higher than 1800 km. That is, 90 “Leningrades” could be built for 10 trillion and, in fact, solve the problem of roads in the European part of Russia, providing them with the country's population living there (90%).

But you can calculate in a different way: according to the order of the Ministry of Construction No. 351/P of 06.29.20. The value of one square meter of housing is 48,634 rubles. Thus, about 210 million meters of housing or about 4 million standard 52-meter two-room apartments could be built for 10 trillion rubles, providing 8 million adults of Russia at the expense of the state, solving the problems of dilapidated and emergency housing, and indeed a significant part of the “housing problem”. And you can “hummate” and spend half the money on the roads, and the second half on housing.

But more than 10 trillions will be spent on the oil and gas production project in severe Arctic conditions, which will give the economy about 100,000 additional jobs and “increase the country's annual GDP by 2% annually”, covering deposits with potential reserves of 37 billion barrels of high -quality low -hearted oil.

We specially note that when implementing the project, priority is given to domestic manufacturers.

It is unlikely that the average cost of oil over a decade will greatly exceed $ 60 per barrel - now, with an oil price above $ 40 per barrel, 11 weeks in a row, the number of drilling at the US shale deposits and oil production. Therefore, at $ 50, shale oil production will feel quite good, and at $ 60 in the world an excess of supply will be observed. Oil as a product is characterized by the fact that both a small deficit and a small proposal surplus is very affected by its value.

Thus, we can assume with sufficient confidence that in 2020–2030. The average price of oil will be closer to $ 50 than to $ 60.

According to the calculations of the Ministry of Energy, mining in the framework of the Vostok-Oil project when providing the maximum tax benefits will be profitable at the price of oil in $ 35–40 per barrel. According to the statement of Deputy Prime Minister Novak (when he was the head of the Ministry of Energy) of October 5, 2019, the development of oil and gas projects in the Arctic in the current tax regime and at current oil prices remains unprofitable. At the time of the publication of this statement, Brent barrels cost $ 58.

So why is a huge project interesting, which will be unprofitable without serious tax benefits? Moreover - if you spend the same money on the construction of housing and roads, you can seriously approach the solution of two main Russian problems - housing and road (forget about fools, judging by the number of votes cast on November 3 for Donald Trump, this is a global problem).

And he is interesting in that it will ensure that the entering the country of foreign currency, which is necessary to ensure procurement, primarily critical imports. Look: Russia was one of the first to have developed its vaccine against coronavirus, but for the release of mass parties it is forced to turn to other countries: we ourselves are able to produce less than 1 million doses monthly. That is, we can invent the vaccine, but to produce it in proper quantities in an extremely short time - no longer. This failure closes critical imports.

Remember how, in the late 80s of the last century, the government, in the context of a strong currency deficiency, made a choice between disposable syringes and bearings for the Soviet automotive industry? And when the choice was made in favor of syringes, the factories rose without imported components - and in the conditions of giant demand for their products. The “Vostok-Oil” is called to prevent the repetition of such a situation, which at the maximum should bring to the country about $ 40 billion export revenue annually.

And no matter how wild it sounds, but the profitability of the project should not be considered from the ratio of investments and profits, but taking into account investments and revenue. That is, we spent $ 115 billion, we get $ 20 billion at first in a year, after 2030 $ 40 billion. If, of course, it is lucky with the price of oil and annually manage to sell all 100 million tons of oil on the global market.