Page 85 - RUSRptSept18

have been “considerably trimming their positions.” The sell off follows a sell off of Russia’s treasury bills, the OFZ, that has gathered pace in recent weeks. The Ministry of Finance cancelled its weekly auction on August 22 due to market jitters after the US government threatened to impose “crushing” sanctions in Russia this autumn that could specifically target Russian sovereign bonds.
9.0 Industry & Sectors 9.1 Sector news
9.1.1 Oil & gas sector news
Gazprom set a record for non-CIS exports (15.9bcm) in July , according to Interfax, citing Information from Gazprom. Exports were c5% higher y/y, even though the July 2017 numbers also set a record. This export volume was attained, despite the repair works at the Yamal-Europe and Nord Stream pipelines. In 7M18, the company's gas output totaled 288.9bcm – 8.5% higher y/y. Domestic sales rose by 5.4% y/y, while non-CIS sales totaled 117.1bcm, a 5.8% increase y/y. Record high exports, especially in July, show Europe's dependence on Gazprom's supply and strengthens the company's position in negotiations on Nord Stream 2 and transit via Ukraine.
Gazprom has started working on a new gas pipeline to China from Sakhalin that might become the second pipeline gas project earmarked for China after Power of Siberia. It would be a branch of the existing Sakhalin-Khabarovsk-Vladivostok (SKV) pipeline with pipeline supplies totalling at least 8bcmpa for, which Gazprom plans to increase SKV's throughput capacity to 20bcmpa by 2020. Gazprom has previously discussed this option for increasing pipeline gas supplies to China on top of volumes supplied under the Power of Siberia contract (up to 38bcmpa). To start running the project Gazprom still requires two things. First, signing the respective contract with China - Gazprom will not run the new pipeline before getting a respective guarantee. Second, the resource base will likely be South Kirinskoye field on Sakhalin shelf, which is currently under international sanctions, and whose development has been shelved as Gazprom is heavily reliant upon foreign technologies to produce from this offshore field. This means that the new pipeline intentions might be premature, and it will take time for Gazprom to overcome the obstacles.
Russian oil producers have already returned oil production to record levels this year and will boost crude production next year further thanks to the launch of several greenfield projects, the Organization of Petroleum Exporting Countries (OPEC) said in a report on August 13. Russian oil production has increased recently to a record 11.2mn barrels a day earning oil producers outsized profits this year. Russian state-owned oil producer Rosneft has already earned more profit in the first quarter of this year than in all of 2017 that recently made it the most valuable company in the country. The Russia’s Energy Ministry raises forecast for oil production in 2018 by 3.5mn tonnes "In 2019, Russian oil companies have the potential to increase production through green field development. Incremental production of oil, NGLs and condensate could come from several projects, such as Uvat, East-Siberian, Vankorneft, Messoyakha and Yamal LNG," OPEC said, reports Tass. Rosneft has three new projects that are expected to come on stream for oil production in the fourth quarter of this year, OPEC reported. The Tagulskoye field is set to start operations in November 2018. The Russkoye field and Phase 2 of the Srednebotuobinskoye field are scheduled for startup in December of this year. OPEC expects that average oil production in Russia will be 11.15mn barrels per day in 2018 and 11.17mn barrels daily in 2019.
85 RUSSIA Country Report September 2018 www.intellinews.com