Page 100 - RusRPTMar19

9.0 Industry & Sectors 9.1 Sector news
9.1.1 Oil & gas sector news
Russia extracted 556mn metric tons of crude oil and associated gas in 2018. Average daily crude production exceeded 11mn barrels a day last year. This is 2% more than in the previous year. Thanks to a reinterpretation of the agreement on voluntary production restrictions among a group of oil-producing countries in June, Russia’s daily output increased by 4% during the second half of 2018. However, new restrictions will likely reduce production in coming months. Also natural gas production grew last year. Production reached 725bn cubic metres. This is 5% more than in the previous year.
Most of Russia’s oil and gas production still takes place near the Urals mountain range in the Perm, Komi, Nenets and Khanty-Mansi regions. Other fields are found in the Far East, lower Volga and Caucasus regions. About two- thirds of Russian oil production and one-third of gas production goes to exports, mostly to Europe. The combination of increased oil and gas export volumes from higher production and higher oil and gas prices lifted export earnings of the energy sector by a third.
Natural gas has traditionally been transmitted via large pipeline grids, but liquefaction makes cargo shipments possible, too. The recent phased start-up for the liquefied natural gas (LNG) facility on the Yamal peninsula has facilitated gas exports. At the end of last year, about 10% of Russia’s natural gas exports were already being shipped in liquid form. In addition to new gas export pipelines to China and Germany under construction, new LNG facilities are planned.
Russia reduced oil production by 97,000 barrels per day on average in January against the level of October 2018, being the reference one in the OPEC+ oil production capping deal, The Ministry of Energy says on Friday citing Minister Alexander Novak. Oil production declined by 145,000 barrels daily against December 2018, when the country reached the production peak. Production of oil as of the end of February 2019 was 118,000 barrels per day lower than last October and 165,000 barrels per day lower than last December, the Ministry said. "Russia fully honours undertaken commitments in accordance with earlier stated plans of phased oil production cut by the end of this March," Novak said.
The US Congress published the text of a draft law that lays out the details of the proposed “crushing” sanctions, the Defending American Security from Kremlin Aggression Act (DASKA 2019), that contained more details of sanctions aimed at Russia’s oil and gas sector. The proposed law suggests imposing sanctions against any person who sells, leases or provides to Russia goods, services, technology, financing, or support in excess of $1mn in value or $5mn in total over a 12- month period that could directly and significantly contribute to the country’s production of crude oil and its ability to develop crude oil resources, VTB Capital (VTBC) said in a note. However, the new sanctions won’t apply to the maintenance of already ongoing projects. The US Secretary of State will clarify the list of ongoing projects that are exempt from the sanctions and list specific goods, services,
100 RUSSIA Country Report March 2019 www.intellinews.com