Page 94 - RusRPTMay19

LNG via the Northern Sea Route using tankers not registered in Russia, which will help the company to resolve the logistics issues of LNG delivery. Novatek launched its first major LNG project Yamal in 2017 despite Western sanctions against its shareholder and influential Kremlin insider and stoligarch Gennady Timchenko. The company has also adopted an ambitious strategy for LNG growth through 2030 and is planning a second LNG plant, Arctic-2.
Russia’s crude production was down 0.4% m/m in March to 11.25mbpd, driven by production cuts while gas output rose 2.9% year-on-year.
Total Russian crude continues to be driven by the production cuts at all integrated oil companies under the OPEC+ agreement, according to data from CDU TEK.
The highest production cut, 0.7% m/m, was printed by Surgutneftegaz, while Bashneft’s crude production was down 0.3% m/m. Rosneft, Lukoil and Gazprom Neft reduced production 0.4% m/m, while Tatneft’s crude output declined 0.6% m/m.
Nonintegrated oil producers kept crude production flat m/m, Interfax reports that the Minister of Energy, Alexander Novak, has said that Russia reached full compliance with OPEC+ cut agreement at the end of March, VTB Capital (VTBC) said in a note.
Russian gas production was up 2.9% y/y in March. Novatek’s production increased 14.0% y/y. Lukoil and Surgutneftegas reduced gas production 4.7% y/y and 2.7% y/y, respectively, while Rosneft ramped up production by 0.8% y/y. Gazprom’s gas production was published at 46.6bcm in March, according to Interfax, implying a modest increase of 0.2% y/y.
“We calculate that Russian crude production in March was 1% below the October 2018 level (the reference point for the OPEC+ agreement) and almost in line with the required level within the OPEC+ production cut agreement reached in December 2018. We note that the highest contribution to the production reduction since October 2018 has been made by Gazprom Neft, which cut its output 5.5%,” VTBC said in a note.
Surgutneftegas posted the highest crude production decline in March, although it remains a relative laggard compared with its peers in terms of production reduction (decreased production 0.3% since October 2018).
Gazprom’s gas production declined -1.4% m/m in March along with weaker gas exports to Europe, which were down -18% y/y to 16.1bcm in March.
Novatek’s consolidated gas production, including its share in joint ventures, increased 14.0% y/y, thanks to the contribution from higher production at Yamal LNG, which more than tripled gas production at the field compared with March 2018, and Arcticgas (+1.0% y/y). Despite that m/m Yamal LNG’s daily production remained broadly flat.
94 RUSSIA Country Report May 2019 www.intellinews.com