Oil & gas forecast: increase in oil production in 2019, lower pipeline gas exports

RUSSIA ENERGY / FINANCE - Report 17 Apr 2019 by Leonid Grigoriev and Marcel Salikhov

Before the release of macroeconomic forecast we publish an update of the oil & gas sector forecast due to its critical relevance for the economy.

In 1Q19 oil production increased by another 3.4% y-o-y despite December 2018 OPEC+ agreement. Russian oil production increased by 1.7% in 2018 while exports rose 2.9% y-o-y.

We expect that formally Russia will stay in the agreement in 1H19 but start to pump in 2H19. Increase in oil production will be a factor of support for the overall economy. There are different views in Russia about the rationale of staying in the agreement. Longer term Russia can further increase oil production. The US/EU sanctions do not have a significant impact on current product but limit long term potential.

Based on OPEC+ agreement uncertainty Russian oil companies cut back their upstream investments last year. Overall investment in oil production fell by 6% y-o-y, to 1.80 trln RUB but we expect investment to pick-up this year.

We expect that in 2019 natural gas production will remain approximately at the level of 2018. In 2018, gas production in Russia increased by 4.5% y-o-y (+32.8 bcm) and amounted to 724 bcm.

However, the export of pipeline gas will decrease by 6%, and LNG exports will increase by 58% due to the expansion of capacity and exports of the Yamal LNG project. In 2020 production will be in the range of 720-740 bcm due to increased competition with LNG on the European market and restrictions on the infrastructure for the delivery of gas to North-West Europe.

In the last three years the natural gas industry was one of the brightest spots in the Russian economy as supplies to EU reached record levels, and LNG exports surged. But in 2019-2020 we expect more or less saturation of current production to a combination of several factors.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.