Page 86 - RUSRptSept18

Russia’s oil exports rose 3.7% m/m in July, reaching 4.735mn barrels per day as Russian firms roll back most of the production cuts agreed to within the OPEC+ framework. Energy Ministry data pegs the output increase to about 150,000 barrels per day, with Moscow signaling intentions to maintain market stability. Alongside increased production, export duties on oil have been reduced 2.65% to $135.40 per ton.
Russian energy giant Gazprom said on August 17 its natural gas output from January 1 to August 15 was up 8.1% y/y to 306.9bn cubic metres (bcm). Gazprom’s exports to Turkey and Europe excluding CIS countries was up 5.7% in year-on-year terms in the same period to 125 bcm, it said.
Russia's largest oil companies are still negotiating the parameters of the government’s proposed "tax manoeuvre" fiscal reform in the oil and gas sector and will take up the issue with President Vladimir Putin after August 27, Vedomosti daily reported on August 7 citing unnamed federal government and industry sources. Previous reports claimed that Russian oilmen already discussed the reform with First Deputy PM Anton Siluanov and Deputy PM Dmitry Kozak in July. The fiscal reform in the oil and gas sector suggests full cancellation of the export duty tax by 2024, and its replacement with the mineral extraction tax (MET). The reform is one of the measures swiftly passed by the government to finance President's Vladimir Putin's RUB8 trillion spending drive and has previously been viewed as negative for the sector by analysts .
The Russian government is considering a proposal that would require Russian oil companies to deliver at least 17.5% of their domestic output to Russian refineries , following a July meeting with Deputy Prime Minister Dmitry Kozak, Kommersant reports. If approved the rule will negatively affect independent oil producers that have export duty tax breaks but are without their own refineries. For integrated oil majors the rule would be neutral. At the same time, the budget might benefit somewhat from an increase in export duty tax collections if part of the oil from fields with tax breaks is sold domestically, while for export deliveries it would be replaced with crude oil from fields without tax holidays.
Russia's total crude oil output in July 2018 stood at 11.22mn barrels daily , up by 1.4% month-on-month and 2.4% year-on-year, according to the August 2 Ministry of Energy report. Relative to the November 2016 levels the output has been cut by 0.032mnbd or only a third versus the 0.1mnbd cut implied by the 23 June 2018 relaxation of the previous Opec+ production cut agreement , Renaissance Capital estimated on August 2. This confirms previous reports that as of mid-July Russia's crude oil output had already reached 11.2mnbd, almost at the record high levels of October 2016, as well as reports on an increase of oil output in June . Previously Russia's Minister of Energy Alexander Novak said that crude oil output in the country is expected to grow almost 1% year-on-year in 2018 and 2019 to 551mn metric tonnes (mnt) and 555mnt, expanding the previous outlook by over 3mn tonnes. "We believe that all Russian oil companies are capable of increasing their crude output quite quickly following the Opec+ decision to lift production," VTB Capital commented on July 26. The bank calculates that in order to reach the production guidance of 55mnt in 2018, production needs to grow 1.7% h/h to 11.18mnbd in the second half of 2018 in Russia, which is 0.9% above the June production level.
Russian gas production continues to be driven by Gazprom: its gas output increased 7.5% y/y in July on the back of strong demand from Europe, with gas exports rising 5% y/y in July, while the two-week maintenance works at the Yamal-Europe and Nord Stream pipelines did not cause any delivery disruptions with gas being channelled via Ukraine. Novatek’s consolidated gas production (including its share in joint ventures)
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