Page 93 - RusRPTJul20

9.0​ Industry & Sectors 9.1 ​Sector news
9.1.1a​ Oil & gas sector results
Russia’s average daily oil production fell by 15.5% on the year to 9.388mn barrels per day in May​, Bloomberg reported on Tuesday citing the Energy Ministry’s CDU TEK dispatcher department. Oil output dropped by 17.2% on the month in May, the agency reported. Average daily gas output fell by 14.5% in May in annual terms tо 52.581bn cubic meters.
On the back of liquids production data published by CDU TEK on June 1, VTBC estimates that the average crude production volume in Russia stood at 8,704kbbl/d in May ​(taking April condensate production as a proxy for May) vs. the agreed by OPEC+ quota of 8,500kbbl/d for Russia.
All integrated oil companies showed considerable output declines compared with April​. Gas production dropped 16.9% in May y/y, continuing with the trend observed in recent months.
The new​ ​OPEC++ production cut deal that will reduce production of oil by 9.7mbpd signed on April 13​ has taken effect. May was the first month the renewed OPEC+ agreement was in effect, under, which Russia was expected to cut its crude oil (excluding condensate) output from some 10,540kbbl/d in 1Q20 to 8,500kbbl/d in May-June.
This was the main reason for the universal production cuts across Russian oil companies. Tatneft’s m/m output decline was smaller than for the rest of the companies, as it had already showed a sizeable 15.7% m/m production drop in April.
The present liquids production data for Russian companies does not allow for an assessment of their compliance with OPEC+, as the data includes condensate (which was excluded from the deal).
Only Gazprom Neft explicitly confirmed at its conference call that it was in compliance with the quota provided by Minenergo.
“However, we note that in April, daily condensate production was 95kt/d, per Interfax data, meaning that if condensate production stayed at the same level or fell (as consistent with lower m/m gas production), Russian oil production was at or above 8,700kbbl/d, around 200kbbl/d higher than the OPEC+ agreement envisages,” VTB Capital (VTBC) said in a note.
Companies slashed their production. Russian crude oil and condensate production declined 17.3% m/m to 9,349kbbl/d. Surgutneftegas, Lukoil and Gazprom Neft cut liquids production 22.8%, 20.6% and 20.1% m/m, respectively, while output at Rosneft (excluding Bashneft) and Bashneft decreased 15.7% and 24.0%, respectively. Tatneft’s daily production also declined, although to a lesser extent than for other integrated oils (1.3% m/m) as the company started to reduce liquids production as early as in April. Based
93​ RUSSIA Country Report​ July 2020 ​ ​www.intellinews.com