Page 88 - RusRPTNov18

9.0 Industry & Sectors 9.1 Sector news
9.1.1 Oil & gas sector news
Russian crude oil production in September exceeded by a small margin its previous peak in the post-Soviet era , the Russian Energy Ministry reported. Russia’s average daily production in August rose by 1.3% y/y to 11.4mn barrels.
Russia and OPEC agreed in 2016 on voluntary limits to oil production, a scheme that since succeeded in substantially raising oil prices. The price of Urals-grade oil, slightly over $50 a barrel at the start of 2017, stood at over $83 a barrel on October 9.
Russia and OPEC agreed in June to get rid of production ceilings. Russian oil output currently exceeds the former agreed ceiling by 400,000 barrels a day. OPEC countries have also boosted their production.
Russian oil production at present is already higher than the economy ministry’s latest forecast for 2019, according to Bank of Finland Institute for Economies in Transition (BOFIT).
“The ministry expects production to rise further in 2020−21 by about 1% a year, and then ease into a slow decline. It is therefore unclear how long the current production level can be sustained without new investment,” BOFIT said in a note.
Amid ongoing concerns over high gasoline prices Russian oil companies agreed to lower the wholesale gasoline and diesel prices and then freeze them until the end of 2018. Next year price growth will be indexed at the rate of inflation, according to Kommersant d aily November 1 report. Fearing popular discontent the state has effectively imposed price controls on the cost of a tank of gas. The heads of Russia's largest oil producers such as Rosneft, Lukoil, Gazprom, Gazprom Neft, Surgutneftegas, Tatneft, Russneft, and others were summoned on October 31 to meet with the Deputy PM Dmitri Kozak, who threatened to introduce additional excise duties for exports of oil products should the companies not cooperate in bring the gasoline prices down. High gasolinepricesarethe maindriverbehindhighinflationaryexpectations, the Central Bank of Russia warns. The regulator showed it is ready for decisive action and further hike key interest rate should inflation diverge from its outlook, which in term risks slowing consumer lending . Kozak reminded the oil majors that domestic market comes first, and hinted that exports could be restricted if the issue is not addressed. "The references to missing earning on domestic market cannot be accepted by neither the citizens, other market participants, nor will be accepted by the political leadership of our country," he said. Gasoline prices are also a political hot potato and the sharp rise in price
88 RUSSIA Country Report November 2018 www.intellinews.com