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FSUOGM COMMENTARY FSUOGM
Gazprom’s fields on the
Yamal peninsula will
play a key role in the
strategy.
But while gas extraction is predicted to con- Special attention is also paid in ES-2035 to
tinue rising, the best-case scenario for oil is that Russia’s offshore resources and onshore Arctic
it remains at the current level. Output is seen reserves. Technological innovations and reced-
ranging between 555mn and 560mn tpy (11.15- ing Arctic ice have made remote fields in these
11.25mn) between 2020 and 2024, falling to northern regions more viable, but low prices rep-
between 490mn to 550mn (9.84-11.05mn bpd) resent a challenge. A number of major discov-
between 2025 and 2035. eries have been made in Russia’s Arctic waters,
The strategy notably does not take into but the government does not expect any new
account Russia’s commitments under the lat- offshore production in the region to start up
est OPEC+ deal, which requires it to lower oil until 2035.
output, excluding condensate, to just 8.5mn bpd Sanctions which bar foreign companies from
during May, June and July – its lowest level in providing technology, financing and expertise to
over a decade. Condensate typically accounts offshore Arctic projects in Russia have also held
for another 7-8% of overall Russian liquids out- back progress.
put. The supply limit will rise to just under 9mn With oil production stagnating, Russia’s focus
bpd from August to December, and 9.5mn bpd is also shifting towards adding value to its crude
between January 2021 and April 2022. by refining it at home and exporting the finished
Assuming Russia does not pull out of the products. Under ES-2035, Russian gasoline
OPEC+ agreement, production will lag behind exports are projected to reach 8.4-9.2mn tpy by
the ES-2035 forecasts. The strategy sees tax 2025, up from 4.2mn tonnes in 2018. By 2035,
reform playing a key role in keeping output close they are expected to come to 17.9-19.9mn tpy.
to the present level. The government currently Russian refiners have been modernising their
uses a revenue-based tax system, but wants to plants in recent years, resulting in an increased
increase the use of profit-based levies. It hopes share of lighter fuels such as gasoline on their
that this will provide greater incentives for oper- product slate. This growth in gasoline output
ators to invest in new greenfield projects, as well will outpace the rise in domestic consumption,
as more costly enhanced recovery techniques. leading to higher exports.
Week 24 17•June•2020 www. NEWSBASE .com P5