New Market Study, "Russia Oil & Gas Report Q4 2012", Has Been Published

Recently published research from Business Monitor International, "Russia Oil & Gas Report Q4 2012", is now available at Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 27 October 2012

BMI View: A high level of investment will be required to maintain Russian oil output at close to recent record levels, putting pressure on the domestic industry and hindering global expansion. Gazprom faces similar challenges in developing sufficient gas to meet European and, possibly, growing Asian demand. Revisions to the Russian tax and regulatory system will be required if Russia is to meet its targets.

The main trends and developments we highlight for Russia's Oil and Gas sector are:

- Russian oil production reached a post-soviet high of 10.29mn barrels per day (b/d) in 2011 and is on track to achieving an even higher level in 2012, with H112 output averaging 10.33mn b/d. Production rose owing to the implementation of a new tax structure, which includes a reduction in export duties on crude and certain refined products. Duty on Russian oil exports has been cut by 4.3% to US$53.62 per barrel (bbl) from US$56.13/bbl, according to a decree published in the Rossiiskaya Gazeta newspaper.
- Production from the Vankor field currently stands at 315,000b/d. Peak production capacity of 500,000b/d is expected by 2014. Lukoil has now brought into play its Yuri Korchagin field, one of the first to be developed in Russia's section of the Caspian Sea, with a peak capacity of 50,000b/d. TNK-BP is pushing ahead with further development of the Uvat oil project in the Tyumen region of West Siberia. The company expects to reach peak output of around 220,000b/d in 2015-2016. BMI is forecasting average Russian production of 10.31mn b/d in 2012, with scope for an increase to 10.41mn b/d by 2016. The economy ministry's latest longterm production forecast sees output stable at 10.60mn b/d in 2015-2020. However, we see output slipping from its 2016 peak to 10.27mn b/d by 2021.
- Beyond 2011, Russian oil consumption is expected to rise at an average rate of 3.13% per annum, much faster than supply expansion. Oil consumption, which is believed to have hit 3.12mn b/d in 2011, should therefore edge towards 3.61mn b/d by 2016 - providing export potential of 6.81mn b/d.
- With Russia having produced an estimated 630bn cubic metres (bcm) of gas in 2011, BMI's latest projections show output rising to 723bcm by 2016 - dependent on growth in European demand and opportunities arising in Asian markets. However, these confident growth forecasts could be undermined by recent estimates published by the Fuel and Energy Dispatch Center (TsDU TEK), which put H112 output at only 339bcm - 2.8% lower than H111. Gazprom expects that total exports will reach a record-high of 222bcm in 2012, but BMI believes these will not exceed 165bcm. Our forecasts see gas exports hitting 221bcm by 2016, as domestic consumption reaches almost 502bcm.

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