Page 80 - RusRPTSept20

9.1.1b Oil and gas sector news
The OPEC+ JMMC meeting took place in August. In July, OPEC+ overall compliance was 95%, while commercial stocks of crude oil started to subside, Kommersant reports, citing meeting participants. The Saudi Arabian Minister of Energy, Abdul Aziz bin Salman, said that he expected global oil demand at the end of 2020 to be 97% of the pre-pandemic level. At the same time, according to the Russian Minister of Energy, Alexander Novak, the rebalancing of the oil market is a slow process and remains fragile.
OPEC+ reminded its members of the importance of compliance and compensation for past non-compliance. In particular, countries that failed to comply with their quotas in May-July have to implement a combined 2.3mmbbl/d of additional cuts (if the cut were to happen within one month). The additional cut might come to 1.2mmbbl/d in August and September, according to Bloomberg’s calculations.
Separately, Novak said that in August to date, Russia was in full compliance with the OPEC+ quota.
In August, the OPEC+ overall production cut was reduced from 9.7mmbbl/d to 7.7mmbbl/d. However, given that those members to the agreement which failed to comply with it in May-July have to keep their production lower, the effective OPEC+ quota in August-September is to be lower.
In the first half of August, Russian oil and condensate production rose 4% vs. July, or roughly 410kbbl/d.
Russia will have to invest US $80–110bn in the next 10 years to raise production of liquefied natural gas (LNG) to 120–140mn tonnes per year from the current 30mn tonnes, Deputy Energy Minister Pavel Sorokin said on August 26. “Russia’s potential is somewhere around 120–140mn tonnes. We are now producing about 30mn tonnes. There is a non-contracted window of at least about 200–250mn tonnes in the world in the span of the next 10–12 years taking into account an increase in demand for LNG. Thanks to the stimulation system built in Russia in the past seven to 10 years, our gas is one of the most competitive ones,” he said. “We have significant potential to occupy a part of the market or a part of the window. If we look into investment, these additional 100mn tonnes of large-batch LNG production that may come will need from $80bn to $100bn of investment in the next 10 years,” he said.
Russia returned to the top position by oil supplies to China in July for the first time since April, according to China’s General Administration of Customs. Russia's exports grew 30.1% on the year to 7.38mn tonnes. Iraq ranked second with supplies rising by 35.7% year-on-year to 5.79mn tonnes.
Russia’s compliance with OPEC+ deal falls to 88% in July. Russia reduced its oil output by 2.2mn barrels per day under the OPEC+ oil output reduction deal to 8.8mn barrels in July, reducing its compliance with the fell to 88% in the month from 90% in June, OPEC said on Wednesday in its monthly report. The country’s liquid hydrocarbon output rose by 0.05mn barrels per day on the month to 9.6mn barrels per day. Compliance with the deal by OPEC states also decreased to 97% in July from 112% in June as the organization’s oil output went up 980,000 barrels on the month to 23.172mn barrels per day. Non-OPEC reduced their oil output by 6mn barrels a day in total, and countries outside the OPEC+ deal accounted for 4.16mn barrels of the amount. The
80 RUSSIA Country Report September 2020 www.intellinews.com