Page 90 - RusRPTSept19

Russia’s Urals blend of crude has started to regularly trade at a premium to Brent. “There is a shortage of competing heavier, sourer crude right now as a result of sanctions on Iran and Venezuela, but also because of OPEC+’s current production cut agreement,” Konstantsa Rangelova, analyst at JBC Energy, said by email. “Urals in the Mediterranean is at an all-time high.”
Russia’s LNG production soaring in 2019 Russia has kept is oil and gas production capped in keeping with the terms of the OPEC+ deal, but the production of liquid natural gas (LNG) has soared in the last year, as the Kremlin hopes to turn gas into a commodity that can be sold anywhere like oil. LNG output was up +86% y/y in July, according to Reuters well ahead of all other raw material production in Russia, including crude oil. Russia has been investing heavily into LNG production through the vehicle of privately owned LNG producer Novatek. Currency Russia produces some 10mn tonnes of LNG a year, but has ambitions to increase that to over 80mn tonnes in the coming years. The state-owned gas giant Gazprom has also begun to invest into LNG. Gazprom expects its LNG portfolio to exceed 6mmt by 2020, from 4mmt in 2018. And LNG is already a big business. Russian LNG exports surged 54.5% year on year in the first half of 2019, data published on August 8 by the Federal Customs Service shows, while piped deliveries overseas slumped 4.9%. Shipments of super-chilled natural gas totalled 29.4bn cubic metres in the six-month period, with growth driven by Novatek’s Yamal LNG terminal reaching its full 16.5mn tonne per year capacity last December. Russia’s other LNG export facility on Sakhalin Island is operated by state-run Gazprom and has a capacity of more than 10mn tonnes per year. In monetary terms, LNG sales were up 70.1% y/y at $4.5bn, on the back of higher international gas prices.
90 RUSSIA Country Report September 2019 www.intellinews.com