Page 9 - RusRPTJan23

crude oil can only be offered for oil priced below the price cap. The price cap is currently set at $60 a barrel, but could be revised downwards later. Russian Urals-blend crude was already trading below the cap price before the cap entered into force. Russian officials have discussed countermeasures to address the price cap and have threatened to cut production by half a million barrels a day or about 7% that could send oil price up over $100 in the first quarter of 2023. A similar price cap for petroleum products should enter into force in February 2023 and will further unsettle the market.
The European Commission also proposed its ninth package of Russia sanctions in December, but they contain nothing of particular note, consisting largely of an expanded list of people added to the Specially Designated Nationals and Blocked Persons (SDN) List.
Gas production in Russia in January-November 2022 decreased by 11.6% compared to the same period last year and amounted to 612.9bcm. The main contribution to the overall dynamics was made by the decline in production at Gazprom. The largest independent gas producers - Rosneft and Novatek - showed an increase in production.
While there has been a lot of talk of peace talks starting in September no concrete action has been taken. Kyiv is calling for a UN sponsored peace summit in February, while the Kremlin has said it is willing to talk peace “at any time”. However, the positions of the two sides is so far apart that no talks are likely. Kyiv is insisting that Russia quit Ukraine completely before talks can start whereas the Kremlin is insisting that Kyiv recognise the annexation of four Ukrainian regions on September 30 before it is willing to talk. Neither side will recognise the other’s demands.
In the meantime, both sides are running low on ammunition and their manpower is stretched. Following the partial mobilisation that started on September 21 the new General Sergey Surovikin has reorganised and adopted a more defensive stance. Russian troops are dug in in multilayer defensive lines in Donbas and from the 300,000 men mobilised, 120,000 are in reserve in the rear allowing for rotation of troops to keep those at the frontline fresh. At the same the rate of artillery fire has been reduced to preserve resources.
Analysts were widely speculating that Russia will mount a major counter offensive in the winter, sometime between January and May, with the goal of taking the whole of the greater Donbas region.
9 RUSSIA Country Report January 2023 www.intellinews.com