Igor Sechin, the president of the Russian oil company Rosneft, announced that the oilfields belonging to the company have the potential of providing output for the next 100 years.

Most of Rosneft’s new petroleum reserves are located on the continen­tal shelf under water. According to Mr. Sechin, the experts estimate that the program for the development of the continental shelf is more complex technologically than the space explo­ration program. It involves pressure, temperatures, and difficult geologi­cal conditions. In the view of Ros­neft’s chief executive, the company must promote the development of the industry with innovative extrac­tion technology. The development of vast hydrocarbons resources and the tools needed to access them will have a huge cumulative effect on the Russian economy. These develop­ments are comparable to the United States’ benefits from the shale gas revolution.

Mr. Sechin has said that the esti­mates of the oil reserves will allow Rosneft to increase its volumes of production in 2014. In particular, Mr. Sechin noted that Rosneft extracts

about five percent of the global vol­ume, and its hydrocarbons reserves will last for 100 years even at full- scale production. The oil company has 44 fields offshore, with reserves of some 42 billion tons of oil equiva­lent. Rosneft also has twenty-three active licenses. Each oilfield on the continental shelf will have three drill­ing platforms. Each platform will be served by three vessels.

In his remarks, Mr. Sechin statec that the shale gas program in Nortf America is not Rosneft’s competi­tor. As such, Mr. Sechin believes that shale gas production is too ex­pensive and could be suitable for the internal market, not for exports, “First of all, it’s not possible to ex­port American shale gas. Produc­tion costs there range from USD60 to USD120 per 1,000 cubic meters. But even if they begin exporting it, all of these amounts will be factored into the amount of consumption, but will not be able to affect the price. Therefore, this does not threaten our gas program in any way.”

In addition to buying new assets, Rosneft plans to benefit from the acquisition of TNK-BP, which hap­pened earlier this year. The company plans to produce 207 million tons of crude oil and 42 billion cubic meters of gas by the end of 2013. During the third quarter of this year Rosneft, produced 136.7 million tons of crude under international standards, reflect­ing a staggering increase from the results of the previous year, when the company’s output was 90.8 million tons of oil during the same period. The production of oil under Russian standards generally follows the same positive track. Production in line with Russian standards exceeds the pro­duction figure under international standard by three million tons.

Mr. Sechin announced plans for building a pipeline connecting the East Siberia-Pacific Ocean (ESPO) line with the Komsomolsk Oil Re­finery. The infrastructure provided by Transneft does not reach as far. Building the missing link may ben­efit Rosneft in terms of savings and earnings. Negotiations with pipeline construction companies are already underway.

Transneft earlier expressed its readiness to build the proposed section of the pipeline. Yet, the oil transportation company soon walked away from the table, never to return to the discussion.

RUR47.5 billion (nearly USD1.5 billion) is required to complete the Project. Power supply facilities and the oil needed to be supplied for the power stations are not factored into the above figure. The estimate was calculated by RN-SakhalinNIP-Imorneft LLC at Rosneft’s request.

Consistent with Rosneft’s plan, by 2017, some 350 kilometers of the pipeline will be completed. The pipe­line will lead to the Komsomolsk Oil Refinery, which is one of the chief producers of petroleum products on the Russian market. The refinery han­dles eight million tons of oil every year.

Rosneft plans to establish a more active presence on the Chinese market by building an oil refinery in Tianjin. According to Mr. Sechin’s an­nouncement, Rosneft expects that the Tianjin oil refinery will come on stream in 2020. The company is also counting on the expansion of quotas for importing Russian oil to China. The Tianjin refinery will be construct­ed by the Vostok Petrochemical joint venture combining the capital of Rosneft (49 percent) and CNPC (51 percent). The construction study has already started. The groundbreaking ceremony for the new refinery cost­ing USD5 billion took place earlier in 2013. The Tianjin refinery will an­nually require 13 million tons of oil, nine million tons of which will come from Russia. Oil products from the new refinery will be directed to North­ern China, the Central Plains region (including Beijing, Tianjin, and the provinces of Hebei, Shanxi, Henan, and Shandong), as well as the coast of Eastern China. Russia and China are still negotiating over the details of the project.

In other corporate news, Rosneft has tapped into the exports of liq­uefied natural gas (LNG), bypass­ing Gazprom’s pipeline infrastruc­ture. According to Mr. Sechin, by the year 2018, there will be no need for independent producers to export gas through any pipeline, as LNG capacities will be sufficient enough to accommodate exports. As to the domestic market, Rosneft has already reached agreements with Gazprom on access to the internal gas trans­port system. Rosneft together with ExxonMobil are developing plans for constructing a liquefied natural gas plant (LNG) in the Far East of Russia. This plant will reportedly produce nearly five million tons of liquefied natural gas. The produc­tion volumes could be increased, if needed.

The company’s financial position makes it possible to begin paying div­idends in the amount of 35 percent of the company’s profits under interna­tional accounting standards. Accord­ing to Mr. Sechin, the company can easily pay 35-percent dividends if the government makes the appropriate decision. Right now, Rosneft is pay­ing 25 percent of profits in dividends.