High in the Arctic circle, three oil terminals on Russia's northern coast are already exporting as much crude oil as Libya -- and that flow could double in the next five years.
It's a sign the development of remote deposits in the country's harsh and fragile north will play an increasingly important role as conventional production in the historic West Siberian oil heartland continues to slide.
Two of the terminals provide outlets for crude from onshore fields in northern Russia that aren’t connected to the huge state-controlled pipeline system. The third sits atop Russia's first offshore oil development in its Arctic waters.
Lukoil's Varandey terminal, on the coast of the Barents Sea, started exporting crude in 2008 and has the capacity to handle 12 million tonnes of oil a year, equivalent to about 240,000 barrels a day.
That figures has never been reached as production from the Yuzhno-Khylchuyu oilfield, developed by Lukoil and Conoco, failed to deliver the volumes expected.
Oil production began at Gazprom Neft's offshore Prirazlomnoye field in December 2013, with year-round exports starting in 2015. Output of the medium gravity, high sulfur crude now totals about 35,000 barrels a day, but should reach a peak of 110,000 barrels before 2020.
The newest of the three terminals, also owned by Gazprom Neft, is Arctic Gate, which was formally inaugurated by President Putin in May. Capable of handling as much as 170,000 barrels a day, the terminal is linked to the company's Novoportovskoye field, where production of medium gravity, low sulfur crude is expected to rise to about 125,000 barrels a day by 2019 from 25,000 barrels today.
Combined, the three terminals handled a combined 230,000 barrels a day in the second quarter of 2016 and the flow has almost doubled from 130,000 barrels as recently as January last year.
By comparison, loadings from Libyan ports averaged about 240,000 barrels a day over the period, monthly ship tracking shows.
Russia's Arctic cargoes are shipped as individual grades, preserving the unique qualities of each field's oil, rather than being blended into one of Russia's uniform export streams.
For Lukoil, this is an advantage. Most of the expected growth in exports will come from Trebs and Titov, two fields it's developing with Bashneft. Their output is well suited to producing high-value transport fuels, so is likely to command a premium over Russia's Urals Blend crude in the Atlantic Basin market, or ESPO crude in the Pacific.
The Trebs and Titov development is now producing about 45,000 barrels a day of light, sweet crude, with output expected to reach a peak of around 200,000 barrels a day by 2020.
The new oil fields feeding Russia's Arctic terminals could be contributing as much as 425,000 barrels a day to Russian oil output by 2020. Other fields in the far north of the country are also expected to begin producing this year, but these will be tied into the country's pipeline system.
Although this is only 4 percent of Russia's total production of almost 11 million barrels a day, it will be vital to maintaining that level of output. Production from Russia's giant fields in West Siberia, most of which were developed in the Soviet era, is firmly in decline and unlikely to reverse that trend.
As long as Russia is hampered by sanctions from exploring and developing the shale oil resources thought to lie beneath the West Siberian oil province, the fields it is developing in the Arctic will play a crucial role in its hydrocarbons future.
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