Page 86 - bne IntelliNews Country Report: Russia Dec17

9.0 Industry & Sectors 9.1 Sector news
9.1.1 Oil & gas sector news
OPEC has maintained its forecast for Russia’s oil and gas condensate output in 2017 at 11.04mn barrels a day, while in 2018, it will continue falling by 10,000 barrels a day to 11.03mn barrels a day, the cartel said in a report Monday. OPEC states decreased oil production by 150,900 barrels a day to 32.589mn barrels a day in November, OPEC also said.
Total crude production was up slightly (0.2% MoM) in October, driven by the growth in production at other producers (+3.2% MoM). Gazprom Neft’s production fell 5.9% MoM, after the 3.9% m/m growth in September. Tatneft and Bashneft also showed production declines (-1.1% m/m and -0.9% MoM, respectively). Crude output at Lukoil was also slightly down (-0.4% MoM), while Rosneft kept crude production almost flat M/m. Surgutneftegas was the only oil major to increase crude production in October (+1.0% MoM).
Russian gas production was also up slightly in October (+0.4% y/y). Novatek’s consolidated gas production fell 6.9% y/y. Among oil names, Lukoil increased gas production 16.1% y/y. Rosneft and Surgutneftegas decreased gas production 1.5% y/y and 0.2% y/y, respectively. Gazprom’s gas production was published by Interfax at 44.7bcm in October, rising 5.0% y/y.
Crude production in Russia rose a slight 0.2% m/m in October . We calculate that total oil production fell 2.4% from the average of October 2016, which is the reference point for the OPEC+ production cut agreement.
In September, maintenance works were conducted at the Sakhalin-1 project and integrated oils increased their production. Given that these works were finished by the end of September and production was subsequently ramped up, oil majors were forced to reduce their production to comply with the OPEC+ agreement in October, we believe.
Gazprom Neft’s crude output dropped 5.9% m/m following the high growth rate shown in September (+3.9% MoM). While the company started production at the Prirazlomnoye field in the mid October, after three months of maintenance works, crude output at Western Siberia fields (Noyabrskneftegaz) slumped 34.2% M/m. As a result, Gazprom Neft’s total oil production fell to levels previously seen in March this year.
Surgutneftegas and Rosneft were the only majors at which production did not decline in October. As for Rosneft own production, the small rise in output in October was balanced by a similar drop in production at Bashneft. Surgutneftegas’s growth in production might be explained by the low base as Surgutneftegas, unlike other integrated oil companies, did not increase production in September during Sakhalin-1 maintenance works.
Russian gas production growth was driven by Gazprom yet again, which added 2.1bcm in absolute terms or 5.0% y/y. However, we note that
86 RUSSIA Country Report December 2017 www.intellinews.com