Page 82 - RusRPTJuly18

support from increased LNG prices in Asia due to the trade war between China and the US, which means an expansion in the premium of Asian over European gas prices.
OPEC+ has agreed to increase production 1mmb/d from the current levels in 2H18 , Kommersant reports. According to Saudi Arabia Minister of Energy Khalid Al-Falih, the quota increase is to be distributed disproportionally among countries, with the monitoring committee to decide on the country distribution of quotas. On 23 June, the Russian Minister of Energy announced that Russian production might increase 200kb/d and in 2018 total Russian production could be about 550mmt. The OPEC+ decision is more conservative than the 1.5mmb/d increase discussed a week ago, as Iraq, Iran and Venezuela were against it, paper writes.
Bnaks calculate that if oil production in Russia increases 200kb/d on average from the current production level, it might be 553mmt in 2018 (a growth of 1.6% on the previous target and by 1.2% from the 2017 level), which is close to the Ministry’s estimates. As we have mentioned previously, we think that all Russian oil companies are capable of increasing their crude output quite quickly in order to close their quotas. We note that Rosneft stated back in May that it could increase its production 150kb/d within two months, while Gazprom Neft recently mentioned that it could raise output 37-40kb/d if the OPEC caps were lifted, guiding for flat YoY production otherwise. Lukoil, during its press conference on 29 May, said that it could quickly restore ‘roughly half’ of its 45kb/d cut in 2-3 months.
A Swedish Court of Appeal has paused an earlier ruling by Stockholm Arbitrage ordering Russia’s Gazprom to pay Ukraine’s Naftogaz $2.6bn compensation for the duration of an appeal brought by Gazprom, Vedomosti and Kommersant daily reported on June 14 citing both Gazprom and Naftogaz. The decision is temporary and depends on the success of Gazprom's appeal, but it blocks Naftogaz's attempts to seize Gazprom's assets in the Netherlands and Switzerland based on original Arbitrage Court decision in its favour. The development will be a major relief for Gazprom's Nord Stream 2 pipeline, the Swiss assets of which were already reportedly inspected by bailiffs. The appeal could take up to a year, which gives the Russian energy giant time to complete the construction of the pipeline which is due to go online in 2019. All the states along its route have given permission for construction except Denmark, the last remaining the country not to issue a construction permit . Lawyers surveyed by Vedomosti b elieve that Naftogaz could appeal the latest decision to grant building permission in the Supreme Court of Sweden, but see such development as highly unlikely. The bitter conflict between Naftogaz and the Russian gas monopolist erupted after a ruling by the Arbitration Institute of the Stockholm Chamber of Commerce that ruled Gazprom must pay to Kyiv a total of $2.6bn for gas deliveries and transit fees. Gazprom refused to resume deliveries of gas to Ukraine on March 1, or pay the $2.6bn to Naftogaz. At the end of May the Ukrainian company appealed to Swiss courts seeking to enforce the recovery of $2.6bn debt from Russia's giant Gazprom.
Russia and Saudi Arabia have agree in principle to increased oil output by 1.5mn barrels daily (mnbd) in the third quarter of 2018, in order to compensate for the production decline in Venezuela and the potential withdrawal of Iranian oil from the market amid new US sanctions,
RUSSIA Country Report July 2018 www.intellinews.com