Page 126 - RusRPTJan21

9.1.1b​ Oil and gas sector news
OPEC and its allies can approve raising the oil output by up to 500 barrels per day (bpd) from January, ​the Wall Street Journal reported on Thursday, citing sources with knowledge of the situation. "The Organization of the Petroleum Exporting Countries and its allies are closing in on an agreement to modestly boost their collective oil output by as much as 500,000 barrels a day starting next month, people familiar with the matter said. The agreement would mark a compromise among some of the world’s biggest producers as they meet later Thursday to formalize a deal," the newspaper said. The OPEC+ countries agreed to reduce their oil output by 9.7mn barrels per day in May to fight the consequences of the global coronavirus crisis, with Russia’s share of 2.5mn barrels per day. Later the cut was prolonged at 9.7mn barrels per day for July, fell to 7.7mn barrels per day for August–December, and to 5.8mn barrels per day until May 2022. The agreement is valid until April 30, 2022, but the members will revise its extension in December 2021. The ministers of the OPEC+ countries were to discuss the deal on Tuesday, but failed to find a consensus, and delayed it to Thursday.
Russian oil output will rise 125kbd in January​, according to Deputy PM Novak. He added that OPEC+ is wary of US shale and other producers who are ready to increase investment and production. OPEC+ will likely continue to add output as 2021 progresses. The production increase is about 1.3% vs the 9.95mmbd of output in recent months and should take total Russian output to c10.1mmbpd. The boost should be shared pro-rata among Russia’s oil companies, implying a c50kbd increase for Rosneft, 18kbd for Lukoil, 14kbd for Gazprom Neft, 11kbd for SurgutNG, and 6kbd for Tatneft. While positive for Russian oil producers, this leaves the country with at least 1.2mmbpd of idle capacity just vs March levels, and we think the country had at least 200-300kbd of capacity idled at that time from earlier OPEC+ agreements. Novak noted that non-OPEC+ countries are preparing to increase output, including the US, Canada, Brazil, and Norway. This confirms our view that OPEC+ will likely continue to add output as 2021 progresses, perhaps at the 500kbd per month rate suggested at the recently-completed meetings. The next OPEC+ meeting is set for 4 January.
Global demand for petrochemical products is expected to grow by about 4% annually, while the demand for oil will grow only by 1%, ​Russian President Vladimir Putin This announced on Tuesday, ​TASS​ reported. He was speaking at a meeting for the strategic development of the petrochemical industry. “By the way, this is very promising. The expected average annual growth rate of world demand [for petrochemical products] is somewhere under 4%. Over the next five years, the demand for oil will be growing by only 1%, and then there will be a general decline, to 0.1,” the Russian leader said. Putin noted that the Russian petrochemical industry has “huge growth potential” and
126 ​RUSSIA Country Report​ January 2021 www.intellinews.com