Page 13 - FSUOGM Week 19 2020

FSUOGM PERFORMANCE FSUOGM
Russian liquids output surges to 11.35mn bpd in April
RUSSIA
Russian oil and condensate production reached 11.35mn bpd in April.
RUSSIAN oil and condensate production was up 5% month on month in April, at 44.448mn tonnes (11.35mn barrels per day, (bpd)), initial data published by its energy ministry shows.
This marks the country’s highest output since January 2019, when 11.38mn bpd was produced. The volume was also up 1% year on year.
April is the only month since the start of 2017 when Russia’s production rate was not restricted under an OPEC+ quota. The previous supply agreement between OPEC+ producers expired on March 31, while the new deal came into force on May 1.
Under this deal, Russia is obliged to cap its oil production at 8.5mn bpd for two months. How- ever, the restriction does not apply to condensate flows.
Russia’s energy ministry does not publish a breakdown of how much oil and how much condensate the country produces each month, merely giving a figure for overall liquids output. However, Energy Minister Alexander Novak
said in December that condensate accounted for 7-8% of total liquids.
Further complicating things, Russia’s OPEC+ quota is set in barrels per day, whereas the minis- try publishes output statistics in tonnes and does not disclose the ratio it uses. The standard ratio, as used by NewsBase, is 7.33 barrels for every tonne.
Russia is close to reaching its target quota for May, sources told Reuters on May 6, noting that oil output had averaged 8.75mn bpd during the first five days of the month. Including gas con- densate, national production was 9.5mn bpd between May 1 and 5, marking the first time it has sunk below 10mn bpd in over a decade.
Russia is implementing the cuts on a pro-rata basis, and all producers, including international companies working under production-shar- ing contracts (PSCs) in the Far East, will be included. OPEC+ cuts will be eased after June but restrictions will remain until the end of April 2022. ™
Rosneft to slash investments by 21% in 2020
RUSSIA
Sechin also asked for support from the Russian government.
RUSSIA’S Rosneft will curb its investment pro- gramme by around 21% this year in response to the oil market collapse, its CEO Igor Sechin told Russian President Vladimir Putin in a meeting on May 12.
Oil companies across the world have been forced to make deep cuts to spending to pro- tect their cash flow, following the oil price crash triggered by the coronavirus (COVID-19) pan- demic. Brent is now trading at around $30 per barrel – less than half its value at the start of the year.
Russian oil companies have also agreed to cap oil production in May and June under the latest OPEC+ deal, aimed at supporting a market recovery.
Rosneft, Russia’s biggest producer, invested around RUB950bn ($13bn) in its operations last year, Sechin told Putin, according to a transcript published on the Kremlin’s website.
“Taking into account, so to say, the dramatic conditions of the global oil market on the whole and due to the decision on the production cuts, we, of course, will have to optimise part of the capital expenditures,” Sechin said. “We will try to keep our investment programme at around RUB750bn.”
Sechin requested that the government post- pone taxes for geological exploration and align
oil transport tariffs with current oil prices. Ros- neft has a long history of disputes with Russian pipeline monopoly Transneft over tariffs. Cur- rently transport costs amount to 32% of the cost of Russian oil, he said.
Sechin also asked the president to ensure a softer banking policy that would provide com- panies with greater access to loans and working capital.
“I understand these concerns; we will defi- nitely discuss this,” Putin replied.
Sechin also announced the start of explo- ration drilling at Rosneft’s Vostok Oil meg- aproject, comprising the Vankor fields and other resources in the Russian Arctic. The company boss has claimed before that the project could one day yield up to 2mn barrels per day (bpd) of oil, countering output decline further south.
In October last year the Russian government agreed to provide Vostok Oil with a RUB600bn ($9bn) break on mineral extraction tax (MET).
Vostok Oil also comprises the Paiyakhsky fields operated by private firm Neftegazholding, controlled by former Rosneft president Edu- ard Khudainatov, and the assets of Rosneft-BP joint venture Yermak-Neftegaz. Rosneft has said before it is seeking international investors to take the project forward.™
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