Thursday, March 5, 2015

5/3/15: Russian Oil & Gas: production and exports

Russian energy exports in the year of economic sanctions -  a nice survey Oil Price (h/t to @RussiaInsider) via

Basic summary: volumes are up (coal), holding (uranium). But, tellingly, no discussion of oil and gas exports. Reason: both are under twin pressures of price and sanctions. So a quick add-on:

  • Oil revenues: switching wells off in Siberia in the winter is tricky, risky and hard to do, so the black gold continues to flow even at current prices. But 2014 oil exports revenues were down 11.4% to USD153.8 billion and volume of exports was down 5.6% y/y to 223.4 million tons. 
  • Oil production: OPEC estimates Russian oil production to decline by 70,000 bpd in 2015 with exports declining by 60,000 bpd y/y. Meanwhile some industry players have much more gloomy outlook: Lukoil sees a possible drop in Russian production of 800,000 bpd by the end of 2016: Meanwhile, December 2014 saw a sharp rise in Russian oil exports to 4.4 million bpd as the Government cut export duty from 59% to 42%. New duty covers also 2015, so we can expect some support for production levels. OPEC estimated Russian production volumes to average 10.58 million bpd, with Q1 2015 forecast of 10.6 million bpd and Q2 forecast of 10.54 millions bpd.
  • Gas: full year estimates for Gazprom exports are down 18.6% y/y to USD54.73 billion, volume of exports down 12.1% to 172.6 billion cubic meters. Average contracted price in 2014: USD317 per 1,000 cubic meters, down 7.5% y/y.
  • Gas plans: Russia has been aggressively shifting new contracts for supplies to Asia Pacific and Turkey. By Energy Ministry estimates, Russian gas exports to Asia will rise from 14 bcm in 2014 to 130 bcm in 2035 and oil and coal exports will more than double.
  • Worth noting the increasing switch in favour of refined petroleum products exports, discussed here:
  • Overall trade impact of the above was to drive down exports revenues to USD782.9 billion or down 7% y/y. Trade surplus was USD210.9 billion in 2014.
  • If imports remain where they were in 2014, and oil price averages of 2015 at USD45 pb, Central Bank of Russia estimates a decline in exports revenues (and trade balance) os around USD 160 billion - painful, but still leaving the country in a trade surplus.

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