Page 106 - RusRPTFeb21

Energy ministry lowers ambitious LNG target for 2035. ​Interfax has reported that the Energy Ministry has updated its development plan for the Russian gas industry. According to the report, by 2035 Russian gas production will reach 847-1,055 bcm, domestic consumption 493-554 bcm, pipeline exports 250-324 bcm and LNG production 90-158 bcm. The ministry assumes oil prices ranging from $45-80/bbl in various scenarios.
An increase in Russian LNG production to 140mn tonnes by 2035 will only be possible if the global LNG industry doubles, according to the document. The reporting by Interfax also indicated that LNG production would be possible at Vostok Oil.
The document also advocates for additional tax incentives, including the cancellation of the export duty for LPG production, a reduction in income and property taxes for LNG and pipeline projects, and MET discounts for hard-to-recover gas and oil rims in the Far East and East Siberia.
The targets in the updated gas industry development plan for gas production, domestic consumption and pipeline exports differed little from those in Russia's energy strategy through 2035, which was approved just last year. However, for LNG production the target range was lowered from 108-189 bcm to 90-158 bcm (by 16-17%). The new plan uses a relatively low gas price assumption of $163/mcm ($4.6/MMBtu) in the most conservative scenario and $256/mcm ($7.2/MMBtu) in the most optimistic one, which probably explains the difference. As we understand, the document was drawn up mainly last year, when the global gas market was rather weak. It is also worth noting that the LNG output target of 140mn tonnes in the optimistic case of the 2035 energy strategy seemed overly ambitious anyway.
Any additional tax discounts for LPG and liquids production from oil rims would most of all benefit Gazprom's East Siberia projects and the Ust-Luga project, while property and income tax discounts could improve the returns for Novatek's LNG projects.
Russia retained its position of the world’s second largest oil producer in the world ​after the US in November, when its output grew by 0.8% on the month to 9.351mn barrels per day, the Joint Organizations Data Initiative (JODI) said in a report on January 20. The US produced 10.93mn barrels per day, up 4.9%. Saudi Arabia’s output remained flat at 8.972mn barrels per day.
Russia in 2020 ranked second after Saudi Arabia in the list of the largest oil suppliers to China​. According to the General Customs Administration of China, in 12 months Beijing purchased more than 83.57mn tonnes of oil from Moscow. According to the report, the price of oil purchased from Russia exceeded $27.3bn. Similar figures for Saudi suppliers amounted to 84.92mn
106 ​RUSSIA Country Report​ February 2021 www.intellinews.com