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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
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