Page 131 - RusRPTMar23

9.0 Industry & Sectors 9.1 Sector news
9.1.1a Oil & gas sector results
In February, oil production in Russia most likely returned to pre-sanction levels and even higher. Already in March it will have to be reduced.
According to Kommersant's estimates, in February, Russian oil production increased by 2% compared to January, to 1.508 million tons per day. This means that for the first time it has reached the pre-sanction level and may even exceed the February 2022 figure.
This is not a low base effect. Last January-February, production was at its maximum after the increase in quotas under the OPEC + deal, and fell sharply only in March due to the first “self-sanctions” - the refusal of traditional buyers from Russian raw materials. Rather, it is a matter of lowering the export duty ($14 per ton, three times lower than in December) due to the collapse of the Urals export price below $50 after the introduction of the European embargo with an oil ceiling and a slight decrease in the discount calculated even on this basis to Brent.
In February, oil companies have enough incentives to increase daily production, Boris Sinitsyn of Renaissance Capital told the publication. But this will mean that in March the decline in production will exceed the reduction planned by the government to fill the budget by 500,000 b/d, or 5% by January. The fall may approach 7% mom, or 650 thousand b/d, and significantly support oil quotes.
Such figures make it even more doubtful that Russian oil companies are really selling Urals at a discount of under $40 to Brent, as it turns out according to the estimates of Argus and Platts agencies on the Baltic basis. The Russian Ministry of Finance continues to rely on the latter when calculating duties.
Natural gas production in Russia decreased in January 2023 by 10.7% y/y to 62.7 bcm. m. This was reported to Vedomosti by two sources familiar with the statistics of the Ministry of Energy.
One of them clarifies that the bulk of the decline fell on Gazprom. In the ministry's statistics, data on Gazprom's production are included in the volume of "other producers", which accounted for 40.7bn cubic metres in January. m. In January 2022, "others" produced 49.9bn cubic metres. m of gas, i.e. the decrease was 18.4%. Gazprom itself reported that it produced 47.4bn cubic metres in January 2022. m. In 2023, the company has not yet published production figures.
131 RUSSIA Country Report March 2023 www.intellinews.com