Page 10 - FSUOGM Week 01 2023

FSUOGM PERFORMANCE FSUOGM

Russian oil output could drop

5-7% in early 2023, warns govt

RUSSIA RUSSIA could slash oil production by 5-7% in The head of the Moscow-based Institute for
early 2023 as a result of Western price caps on Energy and Finance, Marcel Salikhov, said that
The EU embargo is a Russian crude and refined products and Mos- producers would continue moving ahead with
major factor. cow’s retaliatory ban on countries that comply high-earning projects under the profit-based tax
with the restrictions, Russian Deputy Prime scheme, which was enlarged in 2021, rather than
Minister Alexander Novak announced on those under the MET.
December 23. According to Alexei Kokin, an analyst at
Russia accounts for a tenth of global oil out- Otkritie brokerage, producers will not slash
put and is the world’s second-biggest oil exporter exports of Asia-bound ESPO blend in response
after Saudi Arabia, and so Western sanctions and to the measures.
the Kremlin’s response to them could have major “I think profitability of exports via the East
implications for global energy supply. Siberia - Pacific Ocean (ESPO) pipeline is higher
Moscow has provided tax breaks to new fields than via the European ports, as ESPO is $30 per
that support output and generate revenue for barrel more expensive than the Urals blend,” he
the state budget, but mature deposits that do not said.
enjoy this support could suffer. Oil and gas condensate production in
“The companies will cut production at fields Russia is forecast to climb in 2022 to 535mn
with the full rate of mineral extraction tax, just tonnes (10.7mn bpd), from 524mn tonnes
as they did as part of the OPEC cuts,” Kirill Mel- in 2021, according to the Russian govern-
nikov, analyst at the Centre for Energy Develop- ment. But it could fall to 490mn tonnes in
ment, told Reuters. 2023. ™
POLICY

Tokyo asks insurers to continue marine war

cover for LNG carriers in Russian waters

RUSSIA JAPAN’S government has asked the country’s generation, and almost all of it is imported in the
insurers to take on extra risk to continue pro- form of LNG. Furthermore, Japan is the biggest
Tokyo is looking to viding marine war insurance for LNG carriers buyer of LNG from the Gazprom-led Sakhalin-2
safeguard its own in Russian waters, a senior official at the industry project in the Russian Far East, which covers 9%
energy security. ministry told Reuters. of the country’s overall imports. Japan receives
Tokio Marine & Nichido Fire Insurance, additional cargoes from the Novatek-operated
Sompo Japan Insurance and Mitsui Sumitomo Yamal LNG plant in the Russian Arctic.
Insurance on December 23 told shipowners that Tokio & Nichido, Sompo and Mitsui Sumi-
they would stop covering damage suffered by tomo all said on December 26 they were discuss-
ships in Russian wars from the start of this year. ing with other reinsurers to offer cover.
That was after reinsurance firms warned they “Securing LNG is the top priority for the gov-
would also no longer take on the risks of vessels ernment, and we asked insurance companies to
incurring damage from war. co-operate in this regard,” an official at the FSA
However, Japan’s Financial Services Agency told Reuters.
and Agency for Natural Resources and Energy Responding to the letter, Tokio & Nichido,
issued a joint letter to the country’s general insur- Sompo and Mitsui Sumitomo told the news
ance association requesting continued coverage agency they would continue trying to secure
for LNG tankers. more support from reinsurances for war
“The FSA and ANRE have asked insurers coverage.
to take actions to continue offering marine war Reinsurers usually renew their one-year con-
insurance for the shipowners to transport LNG tracts with insurance clients on January 1, which
from Sakhalin-2, as it is key for Japanese energy means that they have their first opportunity to
security,” the official said. reduce exposure since Moscow began its inva-
Natural gas is Japan’s biggest source of power sion of Ukraine in late February. ™

P10 www. NEWSBASE .com Week 01 04•January 04•2022