Page 81 - RusRPTAug19

9.0 Industry & Sectors 9.1 Sector news
9.1.1 Oil & gas sector news
Russia has restored its oil output to levels agreed under a deal between OPEC and non-OPEC oil exporters and production in the last half of July will rise from the first half, Energy Minister Alexander Novak said on Thursday, according to Kommersant. Lower output from Russia’s largest oil producer Rosneft resulted in total Russian production falling to a near three-year low in early July, Reuters reported last week, citing industry sources. Russia’s oil production in the first days of July averaged 10.79mn bpd, the lowest level since August 2016, when production stood at 10.71mn bpd, according to Reuters’ sources and calculations.
Total Russian crude output was up 0.4% m/m, as all integrated oil companies increased crude production in June, according to CDU TEK’s monthly report.
The highest production growth was printed by Tatneft (+1.7% m/m) and Rosneft (+1.2% m/m). Lukoil, Surgutneftegas and Gazprom Neft raised crude production 0.5% m/m, 0.4% m/m and 0.4% m/m, respectively, while Bashneft’s crude output showed only minor growth of 0.1% MoM.
Non-integrated oil producers decreased crude production 1.3% m/m.
Russian gas production was up 1.5% y/y in June. Novatek’s consolidated production (including joint ventures) increased 14.7% y/y. Rosneft and Lukoil reduced gas production 8.8% y/y and 2.9% y/y, respectively, while Surgutneftegas increased gas output 1.4% y/y. Gazprom reported that its gas production reached 257.7bcm in January-June, implying June production at 36bcm (+0.8% y/y).
The m/m production improvement was likely due to the low base effect in conjunction with the issues around the contaminated oil in the Druzhba pipeline.
Russian crude production fell 264kb/d in June from the October 2018 level (- 2.3%), which is the reference point for the production cut under the OPEC+ agreement.
Given that Russian companies have agreed to cut production some 228kbbl/d, the production cut in Russia exceeded the required level by 16% in June, according to VTBC.
The biggest contributors to the production cut are Rosneft (-3.5% against the October level) and Surgutneftegas (-3.5% against October), while Gazprom Neft actually increased production 2.5% (compared with October) after raising crude output 3.3% m/m in April and 4.6% m/m in May.
Gazprom’s gas production was up 0.8% y/y and 2.4% YTD, despite weaker gas exports to Europe, which can be attributed to elevated gas filling at European gas storages, according to Kommersant of 2 July.
81 RUSSIA Country Report August 2019 www.intellinews.com