Page 110 - bneIntelliNews monthly country report Russia May 2024

June, but sanctions stand in their way. The Russian minister of energy stated: "Repairs at the factories are underway. We plan to fix several refineries in April-May, perhaps by the beginning of June." At the same time, since January, Russian oil company Lukoil has not been able to repair the gasoline installation at its Nizhny Novgorod Refinery. It turns out that only the American company UOP, which left Russia, can do this. Due to the lack of necessary knowledge and equipment in the Russian Federation, the timing of these repairs remains to be seen. Western sanctions make it difficult to repair refineries built with the help of American and European engineering companies. As a result, the Nizhny Novgorod Oil Refinery, the fourth largest in the country, has been forced to reduce gasoline production by 40%. Reuters estimates that Russian refineries cut output by 14% in the first quarter of 2024 due to UAV strikes on at least 12 refineries. Experts warn that with further attacks, Ukraine will be able to shut down Russian refineries faster than they can be repaired.
Russian diesel exports continue to drop amid Ukrainian drone strikes on oil refineries. According to Kpler, Russia exported around 740,000 barrels of crude per day in the 10 days leading up to April 13, a 25% decrease from the same period the previous four years.
● Prices & demand
The International Energy Agency is relatively downbeat on the outlook for demand. On April 11, it trimmed its 2024 forecast by 100,000 barrels a day and cut first-quarter consumption estimates by three times that amount. In contrast, analysts at the Organisation of Petroleum Exporting Countries see “robust” oil needs for the summer months. The IEA’s forecast suggests OPEC+ needs to keep a tight grip on supply, especially as output grows among producers outside the alliance’s control. While the consumer group foresees short-lived tightness during the summer — with OPEC crude production falling short of demand by as much as 400,000 barrels a day — the market will be back in balance by the final quarter, it says. The producers’ analysts have a very different view. Their outlook points to a much clearer need for OPEC+ to relax supply restrictions. They left their strong outlook for 2024 unchanged, while tweaking quarterly estimates. Their forecast for 2.25mn barrels a day of demand growth this year puts them right at the top of the range of estimates. Part of the reason is that the analysts expect production growth outside the core OPEC countries to drop to 1.2mn barrels a day, down by about 100,000 barrels a day from last month. The revision, driven by a lower estimate for the US, isn’t huge but leaves the group’s output even further behind what’s needed to balance the market and keep inventories steady. A supply shortfall that rises to more than 2mn barrels a day prompted the analysts to write that the “outlook for the summer months warrants careful market monitoring.”
110 RUSSIA Country Report May 2024 www.intellinews.com