Page 88 - RusRPTSept19

9.0 Industry & Sectors 9.1 Sector news
9.1.1 Oil & gas sector news
Total Russian output in August was up 1.3% m/m at 11.2mmb/d, CDU TEK reported on September 2.
Most of the gains were driven by Rosneft, which printed a sizable increase (+4.8% m/m), while Bashneft’s production was down slightly m/m (-0.6% m/m). Gazprom Neft and Tatneft decreased output 4.2% m/m and 3.8% m/m, respectively. Lukoil reduced production 0.7% m/m,
Surgutneftegas, on the other hand, added 0.4% m/m. Crude production at nonintegrated oil producers was up 1.1% m/m.
Russian gas production was up 1.6% y/y in August, according to Interfax, supported by the 4.1% y/y output growth at NOVATEK (including joint ventures). Rosneft, Lukoil and Surgutneftegas reduced gas production 6.5%, 3.8% and 0.6% y/y, respectively, while Gazprom increased gas production 0.6% y/y.
Separately, Kommersant reports that Gazprom decreased gas exports to Europe 3.5% y/y to 15.8bcm in August. According to the paper, Gazprom’s export volumes were supported by the 10% y/y fall in Norwegian gas production, as well as reduced LNG imports due to low gas prices in the region.
Bankers calculate that Russian crude production in August was 1.1% below the October 2018 level (the reference point for the OPEC+ agreement).
Given that Russian companies have agreed to cut production some 228kbbl/d, the drop in production in Russia fell short of the required cut level by 46% in August. This is a significant rebound in crude production levels from previous months, as Russian companies actually exceeded the required cut level by 17.5% and 16% in July and June, respectively.
The increase in Rosneft’s production in August was supported by a return to growth at the main production unit Yuganskneftegaz after it was hit by the Druzhba pipeline restrictions in previous months.
The highest contribution to the production reduction since October 2018 has been made by Tatneft and Lukoil (-2.1% and -1.3% against the October level, correspondingly), while Gazprom Neft actually increased production 1.3% (compared with October), although it reduced crude output 4.2% m/m after the growth in the previous two months. The fall in Gazprom Neft’s production was driven by Prirazlomnoye, which dropped 63% m/m due to the scheduled maintenance starting 8 August.
Gazprom’s gas production was up 0.6% y/y and 1.8% YTD in August,
despite the declining deliveries to Europe (e.g. exports fell 4.5% y/y in January- August, according to Interfax).
88 RUSSIA Country Report September 2019 www.intellinews.com