Page 4 - FSUOGM Week 02 2022

FSUOGM COMMENTARY FSUOGM

Russian oil output up in Dec, gas

flow soars to multi-year high

Gas production has soared on the back of the European energy crisis

RUSSIA CDU TEK has published Russia’s oil and gas pro- year 2021 (523.3mnt),” BCS GM said in a note.
duction statistics for December 2021 that show “Gazprom was producing at 1.52 bcm per day
WHAT: oil output was well up on 2020 but still lagging in December, which we think might be close to
Oil output is well up on well behind production in 2018 and 2019. The its maximum available capacity. The company
the level in 2020, but the results also show that Russia ended 2021 pro- highlighted the increased gas demand in Rus-
real growth has been in ducing more gas than in any time in the last four sia, which was the key driver for the growth. In
gas flow. years, both in December and for the full year. export, Gazprom continued to fulfil contract
Separately, the draw-down of gas in storage obligations to European customers, and, we
WHY: in Europe in the first week of the year appears to think, is likely to keep its current level of gas pro-
Russian gas output is have slowed and is being used at a pace less than duction in the first months of 2022 unless there
higher in December and at the start of 2021, an unusually cold winter. is much warmer weather in both Russia and
in 2021 than in any other Russian oil production was up 3.5% month Europe,” BCS GM added.
time in the last four on month in December to 46.11mn tonnes in Separately, the amount of gas in storage on
years. absolute terms, reports CDU TEK as cited by January 8 was 54.7% of capacity, having fallen
BCS GM. In daily terms, it increased only 0.1% from 56% at the start of the year. That was down
WHAT NEXT: m/m to 10.86mn barrels per day (bpd). on the 68.5% in storage as of January 8, 2021, but
Europe is on track to Among the integrated oil companies, Sur- Europe started the heating season with less gas
have only 12% of storage gutneftegas showed the highest m/m growth in in storage this year. The chart shows that the rate
left at the end of March. liquids daily output of 3.1%, followed by Bash- of fall has been slower than last year thanks to
neft with 3.0%. Lukoil and Gazprom Neft also milder weather and the arrival of LNG deliveries
increased daily production 0.9% m/m and 0.4% from the US in the last three weeks.
m/m respectively. Tatneft’s daily output was flat However, the rise in temperatures in Europe
m/m. Rosneft’s daily production was down 2.5% led to a decrease in Russian gas supplies in the
m/m. first week of January, Kommersant reports.
The non-integrated companies raised liquids Pumping through Ukraine almost halved
production 1.3% m/m in daily terms to 3mn (according to Slovakian Eustream, the aver-
bpd. age volumes for 1-9 January fell to 54mn cubic
Russia’s gas output was also up 4% year on metres per day, which is some 55% less than
year in December to 69bn cubic metres, CDU in the previous ten days of December 2021),
TEK reports. Gazprom increased production dropped by a third through the TurkStream,
4.9% y/y to 47.2 bcm. Novatek’s standalone pro- and remained at zero through the Yamal-Eu-
duction rose 4.5% y/y. rope gas pipeline, VTB Capital (VTBC)
Yamal LNG’s gas production grew 8.2% y/y, reports.
and Terneftegas’s 4.2% y/y, while Nortgas and “Gazprom is exporting at a rate below histor-
Arcticgas showed declines of 12.9% y/y and 2.7% ical levels for the period, but this is in response
y/y respectively, reports BCS GM. to the demand from European counterparties,
Novatek’s consolidated production was up as persistently high gas prices in Europe push
2.0% y/y. Rosneft’s gas production decreased consumers to cover gas needs via gas from stor-
4.1% y/y. At Surgutneftegas, production rose by ages (filled at 54.7% vs. the multi-year average
7.9% y/y, while at Lukoil it was down 3.6% y/y. of 67.1%) rather than via additional purchases,”
“The data on the production of gas con- VTBC said in a note. “The price of the day
densate in December is not available yet. If we ahead futures for the TTF spot index on the
assume it at 111 kilotonnes per day (November’s ICE Futures now stands at $992 per 1,000 cubic
level), then the production of oil in December metres, which is 12% lower than the day before,
could have been some 10mn bpd, which would but still well above last year’s level of $280/kcm.
be in line with the 10mn bpd Russian OPEC+ We therefore do not expect a tangible reaction
quota. In December, OPEC+ production grew from Gazprom’s shares to the news.”
an additional 400,000 bpd monthly, while Rus- Currently Europe is on track to finish the
sia’s quota increased 100,000 bpd monthly. In heating season at the end of March with gas
total, this resulted in a liquids output increase of amounting to at least 12% of storage capacity left
2.2% y/y to 10.5mn bpd, on average, for the full – its lowest level in years. ™

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