Russia

Vladimir Putin: Clear signs of Russian economic growth

18 Feb 2017   Russia

As oil prices stabilize in the wake of an OPEC-led production deal, Russian President Vladimir Putin said signs of economic strength are becoming clear. The president sat with his top economic advisors for the second time this year, saying there are clear signs of positive momentum. By his read , the 0.2 percent decline in gross domestic product last year was better than expected. “The trends are becoming more or less clear, and we have an overall understanding of the ongoing developments,” he said. “Overall, we are seeing positive economic momentum.” The International Monetary Fund said it expected a 0.6 percent contraction for Russia last year, but growth would return at 1.1 percent in 2017. After keeping its key lending rates unchanged […]

Russia’s Largest Oilfield May Be About to Gush Cash Once Again

15 Feb 2017   Russia

Russia’s largest oil field, so far past its prime that it now pumps almost 20 times more water than crude, could be on the verge of gushing profits again for Rosneft PJSC . Samotlor, the 25 billion-barrel giant that bankrolled the Soviet Union for decades, would be the biggest beneficiary of proposals to encourage investment in some of Russia’s oldest and largest reservoirs, where output is plunging. One idea being debated — cutting the extraction tax in half for fields producing a lot of water with the oil — could add as much as 90 billion rubles ($1.57 billion) a year to Rosneft’s earnings, said Alexander Kornilov, an analyst at Aton LLC in Moscow. “It is a super giant field even today after almost 50 years of production, the elephant of elephant fields,” said Ildar Davletshin, an analyst at Renaissance Capital. “There is still a lot of oil left,” […]

Russia to boost Urals exports in first half despite cutting oil output with OPEC

11 Feb 2017   Russia

Russia is set to post higher exports of Urals crude for the first half of this year despite cutting oil production ahead of schedule under a deal with OPEC aimed at boosting prices. After OPEC and non-OPEC producers agreed in early December to curtail oil output jointly, market expectations of lower supplies from Russia led to a rise in Baltic Urals prices at the start of the year to their highest in 15 years. But in late January, Urals differentials embarked on a downward trend as traders saw clearly that Moscow, seeking to plug a hole in its budget, had no plan to cut exports that month or in February. And if experience serves as a guide, Russia is likely to continue raising exports through spring as maintenance at its refineries peaks in April-May. Under the arrangement with the Organization of the Petroleum Exporting Countries aimed at easing a […]

Russia’s economy grows at $40 per barrel oil

11 Feb 2017   Russia

Russia’s Central Bank Gov. Elvira Nabiullina says the economy will grow even if the price of oil moves back toward $40 per barrel. Photo courtesy of the Central Bank of Russia Feb. 9 (UPI) — The Russian economy will be on the positive side of growth even if the price of crude oil falls to $40 per barrel, the Central Bank of Russia said. Central Bank Gov. Elvira Nabiullina said Thursday the Russian economy stands to exhibit growth this year. The number of economic sectors expected to expand this year is not much greater than those in contraction, but losers are outnumbered. Much of the strength depends on the price of crude oil, however. “We will be in the positive zone in any scenario, even with $40 per barrel,” she was quoted by Russian news agency Tass as saying. A November forecast from the International Monetary Fund found the […]

Putin’s Tough Choice: China Or The West

6 Feb 2017   China, Russia

“With Tillerson’s confirmation, Exxon just annexed the United States,” –anonymous blogger. To many observers, the appointment of Tillerson to the helm the State Dept signaled the Administration’s priority of supporting the oil industry, which in recent years has been under severe pressure from OPEC’s campaign of over-production that forced prices down to a post-recession low. Seen from a different angle, the move also signals Exxon, the oil giant, establishing a strong connection with the Administration. As the former CEO of Exxon, and a member of the Board of Directors of the company that was the core of the original Rockefeller Family’s Standard Oil monopoly, Tillerson also brings direct contact with the Rockefeller Family, whose members remain on the Exxon Board. Former Secretary of State, Condaleeza Rice, who also sits on the BoD, along with Former CIA Director and Defense Secretary, Robert Gates, both listed as an Exxon consultant, also […]

Russia could move quicker on oil production declines

3 Feb 2017   Russia

Russia could move quicker than expected on trimming oil production under the terms of an OPEC-led agreement, the country’s energy minister said Thursday. Russia joined other oil producers in an effort from the Organization of Petroleum Exporting Countries to pull markets back into balance after a glut brought crude oil prices to historic lows in early 2016. OPEC agreed to cut a collective 1.2 million barrels per day from its production and non-members agreed to about half that. Russia accounts for the lion’s share of the non-OPEC production cut with 300,000 bpd. Russian Energy Minister Alexander Novak said companies so far have signaled they’ll implement the agreement. “It is possible that they will be [implemented] at a faster pace,” he […]

Russia Claims Global Oil Output Down By 1.4M Bpd

2 Feb 2017   OPEC, Russia

Russian Energy Minister Alexander Novak has announced that global oil output was cut by 1.4 million barrels per day last month, in the aftermath of the deal between OPEC and non-OPEC countries to rebalance the market. Novak made his announcement during a meeting with Russian President Vladimir Putin, referring to preliminary data without explaining the sources of the data. If Novak’s figures are correct, it would mean that OPEC and non-OPEC countries are close to meeting their goal of cutting a combined 1.8 million barrels per day by the first half of this year. At a compliance meeting in Vienna earlier in January, Novak said that Russia had reduced its oil production by some 100,000 barrels a day. Russia intends to cut its oil production by 200,000 barrels per day by the end of the first quarter and afterwards 300,000 barrels per day. “Some countries have cut more than […]

Is The Kremlin Funding A Campaign That Undermines U.S. Fracking?

2 Feb 2017   Russia, Shale Oil

The recent National Intelligence Council report assessing the involvement of Russia in last year’s U.S. presidential elections spurred a flurry of media reports suggesting that Russia is heavily involved in anti-fracking campaigning. Some authors interpreted this involvement as a “ propaganda effort ”, while others claimed the Kremlin was financially backing anti-fracking groups in the U.S., without, however, providing any evidence for this claim. The basis for all these reports is part of the report, in which the authors discuss the agenda of RT, a state-funded TV channel and website that is widely seen as the Kremlin’s chief megaphone abroad. They quote shows and reports that led them to conclude that RT aimed at fueling discontent in the U.S. and influence interior politics. Anti-fracking rhetoric was identified in the report as a major element of RT’s agenda and interpreted by the report’s authors as reflecting Russia’s concern about the […]

Arctic oil production more than doubled, Russia says

31 Jan 2017   Russia

Russian oil company Gazprom Neft said its production from a field in Arctic waters more than doubled from levels reported in 2015. The company said total production from the Prirazlomnaya oil field in the Russian waters above the Arctic Circle totaled 15.7 million barrels for full-year 2016, an increase from the 5.8 million recorded the previous year. Prirazlomnoye is the first and only field in production in the Russian Arctic. Commercial oil production started in late 2013 and the first batch of oil for delivery was sent in April 2014. Advocacy groups like Greenpeace have been critical about oil operations in the extreme climates of the Arctic north, saying an oil spill in the region would be catastrophic and difficult […]

Lukoil Seeks Middle East Oil Projects for Growth as Iran Opens

30 Jan 2017   Iran, Russia

Lukoil PJSC is seeking opportunities for growth in the Middle East as Iran opens more of its oil fields to international partners, according to the Russian energy company’s regional head. The Moscow-based company plans to add output from the region to existing operations in Iraq and Egypt as long as it finds projects with production costs as low as those in Russia, Gati Al-Jebouri, Lukoil’s head of upstream for the Middle East, told reporters in Dubai. “Iran is our target area at the moment,” Al-Jebouri said. Lukoil is in talks with National Iranian Oil Co. , the Persian Gulf country’s state producer, about the Ab Teymour and Mansouri oil fields in western Iran, he said. Al-Jebouri said he hoped the companies could agree on a common development program for the fields in the first half of the year before proceeding to commercial negotiations and a partnership. Iran has outlined […]

Russia’s Lukoil hopes for Iran oilfield development decision this year

30 Jan 2017   Iran, Russia

Lukoil, Russia’s No.2 oil producer, hopes to reach a decision on developing two new oilfields in Iran and wants to expand its operations further in the Middle East this year, a senior executive said on Sunday. Lukoil is talking with the National Iranian Oil Company (NIOC) on taking part in development of the Abe Timur and Mansuri fields in central-western Iran, said Gati al-Jebouri, vice president and head of upstream operations in the Middle East. “We are in active discussions with them with respect to budget cost structure, and subsequently we will start negotiations on contractual terms if the development plans that we proposed are accepted and agreed by the Iranian party,” Jebouri told reporters on Sunday. […]

Potential impacts of US lifting sanctions on Russian oil sector

30 Jan 2017   Russia

US President Donald Trump said Friday ahead of his first conversation with Russian President Vladimir Putin since taking office that it was too soon to know whether to continue US sanctions against Moscow. Trump has promised to take a softer approach to Russian relations than his predecessor, fueling speculation that he could lift the sanctions. “We’ll see what happens,” Trump said during a joint press conference with UK Prime Minister Theresa May. “As far as the sanctions, [it’s] very early to be talking about that.” Trump and Putin are scheduled to speak Saturday. Article continues below… Platts London Oil & Energy Forum February 20, 2017 | May Fair Hotel, London With sessions on the global outlook for crude oil, middle distillates and the light ends markets of gasoline, naphtha and LPG, alongside updates on the evolution of our key benchmark price assessments, the Platts London Oil and Energy Forum […]

U.S. Shale Won’t Pilfer OPEC, Russian Markets, Former Energy Minister Says

28 Jan 2017   Russia, Shale Oil

A former Russian energy minister on Friday dismissed concerns U.S. shale oil companies may try to use production cuts by Russia and nations in the Middle East to swoop in and steal market share, saying the Americans know there are some no-go zones. Igor Yusufov, Russia’s energy minister from 2001 to 2004, said U.S. shale producers wouldn’t attempt to enter core OPEC and Russia markets where prices are too low for them to compete….

Russia Makes A Move On Asian Oil Markets As OPEC Cuts

27 Jan 2017   OPEC, Russia

Oil prices have been struggling to rise beyond the low $50s per barrel. Not helped by news this week that Libya’s production has hit a 3-year high at 715,000 barrels per day — and is expected to rise to 1.25 million b/d by end-2017. And the crude market may have an even bigger problem looming. Russia. New data Monday showed that Russian oil producers achieved a major milestone in 2016. Becoming the largest supplier of crude to energy-hungry China. That came as Russian oil shipments to China rose 24% as compared to 2015 levels — to an average 1.05 million barrels per day for the year. Inching Russia ahead of go-to supplier Saudi Arabia, which saw its exports to China average 1.02 million b/d in 2016. That shift is happening as Saudi producers reportedly reigned in output under the OPEC production cuts agreed in late 2016. A move that […]

How Russia sold its oil jewel – without saying who bought it

25 Jan 2017   Russia

More than a month after Russia announced one of its biggest privatizations since the 1990s, selling a 19.5 percent stake in its giant oil company Rosneft, it still isn’t possible to determine from public records the full identities of those who bought it. The stake was sold for 10.2 billion euros to a Singapore investment vehicle that Rosneft said was a 50/50 joint venture between Qatar and the Swiss oil trading firm Glencore. Unveiling the deal at a televised meeting with Rosneft’s boss Igor Sechin on Dec. 7, President Vladimir Putin called it a sign of international faith in Russia, despite U.S. and EU financial sanctions on Russian firms including Rosneft. “It is the largest privatization deal, the largest sale […]

Russia in full-court press over European gas pipeline

25 Jan 2017   Europe, Pipelines, Russia

European regulators may be standing in the way of their own regional energy security with their stance against a gas pipeline, Russia’s Gazprom said. Viktor Zubkov , the chairman of the board at Russian gas giant Gazprom, said European regulators were needlessly standing in the way of access to the OPAL gas pipeline. “Its capacities had been groundlessly blocked for several years,” he was quoted as saying by Russian news agency Tass. “The relevance of the decision is demonstrated by the fact that already at the beginning of this year Nord Stream was utilized to the greatest possible extent, though previously experts said a pipeline via the Baltics was not needed.” Access to OPAL is necessary if the Russian natural gas company is to […]

Gazprom’s Medvedev dismisses role of US LNG in European natural gas market

25 Jan 2017   LNG, Russia

Russia is the gas supplier of choice for European markets and will remain the most cost-effective and reliable source of gas in Europe, Alexander Medvedev, Gazprom’s deputy CEO, said Tuesday. Speaking at the European Gas Conference in Vienna, Medvedev said US LNG had been a “big hope” for Europe, but that the record flows of Russian gas to Europe in 2016 — almost 180 Bcm — were evidence of Russia’s position as the leading gas supplier to its European partners. “Russia is the only gas supplier that can reliably and flexibly supply gas in any amount. We can supply whatever Europe wants — we have the capacity to supply an additional 150 Bcm/year,” he said. In an apparent reference to US LNG exports starting up in February last year, Medvedev said Europe had chosen Russian gas despite there being newer supply options. “Our clients have a variety of diversification […]

Russia beats Saudi Arabia as China’s top crude oil supplier in 2016

24 Jan 2017   China, Russia

Russia overtook Saudi Arabia in 2016 to became China’s biggest crude oil supplier for the first year ever, customs data showed on Monday, boosted by robust demand from independent Chinese “teapot” refineries. Russian shipments surged nearly a quarter over 2015 to about 1.05 million barrels per day (bpd), the data showed, with Saudi Arabia coming in a close second with 1.02 million bpd, up 0.9 percent in 2016 versus the previous year. China is the world’s second-largest oil buyer and the fastest-growing major importer. While Saudi Arabia counts China’s state oil firms as backbone clients over long-term supply contracts, China’s independent refineries – nicknamed “teapots” due to their smaller processing capacity – saw Russia as a more flexible supplier. For the teapot plants, authorized to import crude oil importers for the first time in late 2015, shipments from Russia’s eastern ports are easier to process, coming in smaller cargo […]

Gazprom Mulls $6 Billion Asset Sales, Dividend Freeze

24 Jan 2017   Russia

Gazprom PJSC, the world’s biggest natural gas producer, is considering asset sales, freezing dividends and increasing its borrowing as export earnings wane, according to its three-year budget. The state-controlled company aims to raise 350 billion rubles (around $6 billion) from asset sales this year, while borrowing may climb to 288 billion rubles and more than double from that level next year, a copy of the document obtained by Bloomberg News show. Dividend payments are forecast at the 2016 level through 2019, according to the plan, approved by the board in December. Despite a rebound in crude oil, which dictates the price for most of Gazprom’s export contracts, the proposed budget shows the company remains under financial pressure as it tries to finance new pipelines to Europe and Asia. Gazprom needs to increase borrowing to “ensure liquidity and cover obligations” at oil prices close to current levels, according to the […]

Russia Locks In on What’s Wrong With Ruble During Oil Frenzy

24 Jan 2017   Russia

Untethering the ruble helped Russia ride out the biggest oil downturn in a generation. But it’s left the world’s biggest energy exporter vulnerable to greater volatility in crude prices as OPEC pushes output cuts . To address that, the Bank of Russia is preparing to wade back into the currency market after an 18-month absence and soak up foreign revenue earned in excess of the $40 oil price assumed in the budget. First Deputy Prime Minister Igor Shuvalov said in an interview last week that currency purchases are possible already at current oil prices. The exchange rate needs to be more “predictable,” Finance Minister Anton Siluanov said on Saturday. “At this stage of economic recovery, Russia would benefit from a stable ruble rather than further potentially excessive appreciation, which could undermine the competitiveness of Russian exporters at the time when the global trade pie seems to be shrinking ,” […]

Why Russia Beat Saudi Arabia As China’s No.1 Oil Supplier

24 Jan 2017   China, Russia

Russia last year overtook Saudi Arabia as China’s biggest supplier of crude oil thanks in large part to increased demand from independent refineries, popularly called teapots. This is what statistics data released today by Beijing’s customs authority show. The average daily amount that Russian companies exported to China in 2016 stood at 1.05 million barrels, up by 25 percent from 2015. Saudi Arabia’s average daily shipments to the world’s second-largest oil consumer were 1.02 million barrels daily in the period, an amount representing a slight 0.9-percent uptick on 2015. Russia is likely to keep its place as top exporter to China this year as well, as long as demand from teapots remains intense: while China’s state oil companies are bound by long-term contracts with Saudi Arabia, the small refineries have taken advantage of more flexible export conditions offered by Russian exporters as well as from the proximity of Russia’s […]

Russia Wrests Crown of Top China Oil Supplier From Saudi Arabia

23 Jan 2017   China, Russia

Russia overtook Saudi Arabia as China’s top oil supplier last year for the first time ever amid the ongoing battle for market share in the world’s biggest energy market. Russia boosted crude supply to the Asian nation by 24 percent from 2015 to 52.5 million metric tons, or 1.05 million barrels per day, according to data released Monday by the General Administration of Customs. The Middle Eastern kingdom became the second-biggest supplier, shipping 51 million tons, or 1.02 million barrels per day, little changed from a year earlier. Russia has been tussling with Saudi Arabia for dominance in the Asian nation amid efforts by oil producers to defend market share during a worldwide glut. Chinese demand has been seen as a key to a sustainable recovery in prices, while benchmark rates are climbing from the worst crash in a generation amid output cuts by major producing nations. China last […]

Russia’s Novak says sees oil price at $50-$60 in 2017: TASS

23 Jan 2017   Russia

Russia’s Energy Minister Alexander Novak addresses a news conference after a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, December 10, 2016. Russian Energy Minister Alexander Novak sees global oil prices at between $50 and $60 per barrel in 2017, TASS news agency quoted him as saying on Sunday. According to Interfax news agency, Novak also said that countries involved in a deal between OPEC and non-OPEC oil producers could reduce their output by more than 1.7 million barrels per day by the end of January. (Reporting by Polina Devitt; editing by Jason Neely)

No Ruble Tripwire Seen for Russia as Currency Strains Mount

19 Jan 2017   Russia

The ruble is settling in a range where the Bank of Russia purchased foreign currency in 2015, but this time policy makers are looking the other way. The central bank would probably consider currency interventions only after it resumes interest-rate cuts early this year, according to Bank of America Corp. The ruble remains “broadly in line with oil prices” and other measures of its fair value, “arguing against an imminent intervention,” Citigroup Inc. analysts said. The Russian currency traded below 60 against the dollar for a sixth day on Wednesday, the strongest since July 2015. “Despite the significant ruble appreciation, all the statistics that we look at strongly suggest that the currency is broadly where it should be,” Citigroup economists Ivan Tchakarov and Ekaterina Vlasova said in a report. “Therefore, we think it is hard to make a strong case for the central bank to stem further ruble advance […]

Russia hints at economic stimulus

18 Jan 2017   Russia

After hinting at a new tax policy on the oil industry, the Russian government said nearly $2 billion will be set aside to help the economy. Russia’s currency lost considerable value at the start of last year and the broader economy faced dual strains from lower crude oil prices and economic sanctions imposed after the 2014 annexation of the Crimean Peninsula from Ukraine. Russian Prime Minister Dmitry Medvedev said as much as $1.8 billion, or 107.5 billion rubles under the current exchange rate, in stimulus was on the agenda for 2017. “The funds will be earmarked for transport machine building, production of locomotives and cars, machine building in agriculture, construction, highway and public service, as well as machine building in food and manufacturing industry […]

Russia launches new domestic oil and gas pipelines

18 Jan 2017   Russia

Russia on Wednesday launched a new domestic gas pipeline and two new oil pipelines at a ceremony attended by President Vladimir Putin. The Bovanenkovo-Ukhta 2 gas pipeline, which has the capacity to pump 263 million cubic meters per day, will feed supplies into export routes to northern Europe. Also inaugurated at the ceremony were the Kuyumba-Taishet and Zapolyarye-Purpe oil pipelines.

No Ruble Tripwire Seen for Russia as Currency Strains Mount

18 Jan 2017   Russia

The ruble is settling in a range where the Bank of Russia purchased foreign currency in 2015, but this time policy makers are looking the other way. The central bank would probably consider currency interventions only after it resumes interest-rate cuts early this year, according to Bank of America Corp. The ruble remains “broadly in line with oil prices” and other measures of its fair value, “arguing against an imminent intervention,” Citigroup Inc. analysts said. The Russian currency traded below 60 against the dollar for a sixth day on Wednesday, the strongest since July 2015. “Despite the significant ruble appreciation, all the statistics that we look at strongly suggest that the currency is broadly where it should be,” Citigroup economists Ivan Tchakarov and Ekaterina Vlasova said in a report. “Therefore, we think it is hard to make a strong case for the central bank to stem further ruble advance […]

Icy conditions, non-OPEC cut could hit Q1 Far East Russian crude exports

17 Jan 2017   Russia

A double whammy of icy conditions in the oil fields in the Russian Far East and the major non-OPEC producer’s latest promise to cut production could lead to a decline in Sokol and Sakhalin Blend crude exports in the first quarter, market sources said Monday. Heading into the second half of the March trading cycle, clarity over the loading dates for light sweet Far East Russian grades was still lacking and market participants continued to await the release of full loading details for the month. The general expectation, however, was that exports of the Far East Russian grades for Q1 may drop from the previous quarter as production and logistics are hampered by extreme cold winter conditions, traders said. “Sokol’s final [March-loading] program will only be [confirmed by] next Friday … it’s much later than usual,” said a source with direct knowledge of the light sweet crude’s monthly exports, […]

IMF: Oil-rich Russia needs either-or economic policies

14 Jan 2017   Russia

Russia needs to ensure its economy is braced for an oil shock in either positive or negative terms, a deputy at the International Monetary Fund said. Russia is party to a joint agreement with the Organization of Petroleum Exporting Countries to trim output in an effort to balance a supply-side market that’s putting negative pressure on crude oil prices. David Lipton, a deputy director at the IMF, said in an interview with Russian news agency TASS that, given the uncertainty surrounding compliance with the agreement, economic planners at the Kremlin had to prepare for an either-or scenario. “The Russian economy is going to be affected by oil market developments for sure, and it’s possible that positive shock of […]

Russia says starts cutting oil production in line with OPEC agreement

13 Jan 2017   Russia

Russia has begun cutting oil production in line with the OPEC agreement, Russian Energy Minister Alexander Novak told reporters in Moscow on Thursday. Novak declined to estimate how much January output would be cut by, saying that would depend on the weather this month. (Reporting by Vladimir Soldatkin; Writing by Polina Devitt; Editing by Andrew Osborn)

As Russia’s gas market gets weaker, Europe gets stronger: Grigas

12 Jan 2017   Russia

Europe’s Trans Anatolian natural gas pipeline in Turkey has hit a major milestone. It passed the halfway mark to completion at the end of 2016, bringing the Southern Gas Corridor pipeline project closer to its finishing point – and closer to reducing Europe’s dependence on Russian gas. If the corridor succeeds as planned, the project will bring Caspian gas into the European market for the first time Perhaps even more importantly for Europe: The progress of the project will add a new dimension to the sweeping changes currently taking place in the global natural gas markets. The increase in global natural gas production, the buildup of new gas transport infrastructure, the decrease in natural gas prices, the growth of liquefied natural gas (LNG) trade are all already increasing the options for […]

As Russia’s gas market gets weaker, Europe gets stronger: Grigas

12 Jan 2017   Russia

The logo of Gazprom is pictured at the 26th World Gas Conference in Paris, France, June 2, 2015. Europe’s Trans Anatolian natural gas pipeline in Turkey has hit a major milestone. It passed the halfway mark to completion at the end of 2016, bringing the Southern Gas Corridor pipeline project closer to its finishing point – and closer to reducing Europe’s dependence on Russian gas. If the corridor succeeds as planned, the project will bring Caspian gas into the European market for the first time Perhaps even more importantly for Europe: The progress of the project will add a new dimension to the sweeping changes currently taking place in the global natural gas markets. The increase in global natural gas production, the buildup of new gas transport infrastructure, the decrease in natural gas prices, the growth of liquefied natural gas (LNG) trade are all already increasing the options for […]

General Frost to the rescue: cold helps Russia comply with OPEC deal

11 Jan 2017   Russia

It has defeated armies trying to invade Russia in the past, and now the fabled Russian winter has come to Moscow’s rescue again, this time helping it comply with a deal among world oil exporters on cutting output. Russia, which has in the past been accused of dragging its feet in implementing oil production and exports deals, reduced production by 100,000 barrels a day in the first few days of January, industry sources told Reuters. That is a third of the way towards the total cut Russia promised to deliver by mid-2017. That reduction, or at least part of it, is the result not so much of Russian zeal to honor the agreement as […]

Kremlin says Russia carrying out obligations under oil output deal

10 Jan 2017   Russia

Workers look at a drilling rig of the Rosneft-owned Prirazlomnoye oil field outside Nefteyugansk, Russia, August 4, 2016. Russia is fulfilling all its obligations under a deal between OPEC and non-OPEC oil exporters to curtail global crude output, Kremlin spokesman Dmitry Peskov said on Tuesday. “Without question Russia is carrying out all the points of the agreement and all the obligations that it took upon itself,” Peskov told a conference call with reporters. Asked if a cut in Russian output since the start of January was connected to the global deal, he said that was a question for the Russian energy ministry. (Reporting by Christian Lowe; Editing by Maria Kiselyova)

Russia: Few economic burdens with oil above $40

10 Jan 2017   Russia

Russia needs clear economic policies to prevent shocks from oil prices, though stability is expected at $40 per barrel, a development minister said. The Central Bank of Russia in late December reported a net contraction for full-year 2016, though the level of decline was less severe in the latter half of the year. The oil-dependent economy faced dual strains from the low price of oil and economic sanctions, but Russian Minister of Economic Development Maxim Oreshkin told business daily Kommersant the situation is improving as crude oil prices increase. Russia is party to a plan outlined by the Organization of Petroleum Exporting Countries to curb production. The move is meant to offset the supply-side strains that pulled oil prices below $30 in early […]

The Secrets Behind Russia’s 2016 Oil Success

10 Jan 2017   Russia

For every one dollar reduction in the price of oil, Russia suffers a staggering two billion dollar loss in its revenue. On top of the economic sanctions slapped on Russia following the annexation of Crimea, one may consider the record Russian oil production of 11.247 mbpd nothing short of a miracle. But how did Russia, while other oil producers were in doldrums, keep its nodding donkeys busy pumping oil? In the U.S., the rig count was falling every week and oil companies were filing for bankruptcy. Yet the Russian production in October touched a post-Soviet Era high. The secret to its success appears to be a combination of tax measures, the dollar value and the advantage of low-cost production. The Russian oil majors, Rosneft and Lukoil, which account for almost half of the country’s oil production, increased their capex spending last year. Rosneft’s increased capital expenditure last year by […]

Slippery Logic to Russia’s Oil-Cut Claim

5 Jan 2017   Russia

“They say they milk chickens” goes the Russian proverb. With crude prices up 50% from a year ago, energy investors would do well to take this skeptical saying to heart. A big component of the recent rally was Russia’s pledge to contribute 300,000 barrels a day of output cuts in the first half of 2017 to supplement a deal by the Organization of the Petroleum Exporting Countries. Russian government data peg recent crude output at 11.2 million barrels a day, forming the basis for cuts . The problem is that this puts output near a post-Soviet record and about 370,000 barrels a day higher than July. In other words, production since talks began about a coordinated output freeze has risen by more than the agreed cut to production. If ignoring the cuts wouldn’t even bring Russian output back to square one, then how credible are they? Russia’s oil minister […]

Russia To Outperform China And Outlive Sanctions In 2017

5 Jan 2017   Russia

A very busy year The last year was kind to Rosneft. Even with continuous low oil prices and the Western sanctions, the Russian state-owned oil giant signed a landmark refinery and supply deal with Essar Oil in India. In addition, Rosneft began offshore operations in Vietnam, signed a refinery deal with Indonesia’s Pertamina, began offshore operations with Statoil in the Sea of Okhotsk, reportedly got Japanese firms to agree to joint exploration of the Sea of Japan, bought a 30 percent stake in an Egyptian gas field from Italian firm Eni, and closed a deal for the privatization for 19.5 percent of its state-owned shares with Glencore and the Qatar Investment Authority. Domestic developments have gone well with the acquisition of Bashneft and the arrest of Russian Economy Minister Aleksandr Ulyukaev who supported more aggressive privatization. Igor Sechin, Rosneft’s CEO, has been busy. Most observers point to increased cooperation […]

This “Rogue” Oil & Gas Nation Just Set A Slew Of Output Records

5 Jan 2017   Russia

With 2016 now closed out, we’re getting the first looks at year-end data. And numbers from one nation in the energy space have been particularly eye-catching this week. Russia. Over the last 15 years, Russia vaulted upwards in oil and gas production — challenging for the world’s top producer of crude. A fact that’s especially critical given this big producer is a “rogue” nation that lies outside the purview of OPEC. And 2016 was another big year for Russian oil output. With stats showing the country’s production rose again this past year — to an average 10.96 million barrels per day, up from 10.72 million barrels per day in 2015. That came on the back of strong national production in December, where Russian producers pumped 11.21 million barrels per day — marking the highest output level in nearly 30 years. That’s a very important data point for energy markets, […]

Why Russia Expects $40 Oil This Year

5 Jan 2017   Russia

Budget deficit is a fascinating thing. It can turn around economies if it’s large enough or it can highlight their resilience, if it turns out to be not as large as expected. The thing is, no government can be 100 percent certain in advance what budget deficit it will have to contend with in any future fiscal year. Russia is a case in point as it recently approved its 2017 budget, which envisages a deficit of 3.2 percent of GDP – a figure comparable to the United States’ 2.6 percent estimated for 2017. According to some analysts, however, such as Mauldin Economics’ Jacob Shapiro , this 3.2 percent is enough to make life difficult for Moscow over the next 12 months, which is why the Kremlin should hope for higher oil prices. In fact, Shapiro says Russia needs oil prices to be 30 percent higher just to break even. […]

Russia To Outperform China And Outlive Sanctions In 2017

5 Jan 2017   Russia

The last year was kind to Rosneft. Even with continuous low oil prices and the Western sanctions, the Russian state-owned oil giant signed a landmark refinery and supply deal with Essar Oil in India. In addition, Rosneft began offshore operations in Vietnam, signed a refinery deal with Indonesia’s Pertamina, began offshore operations with Statoil in the Sea of Okhotsk, reportedly got Japanese firms to agree to joint exploration of the Sea of Japan, bought a 30 percent stake in an Egyptian gas field from Italian firm Eni, and closed a deal for the privatization for 19.5 percent of its state-owned shares with Glencore and the Qatar Investment Authority. Domestic developments have gone well with the acquisition of Bashneft and the arrest of Russian Economy Minister Aleksandr Ulyukaev who supported more aggressive privatization. Igor Sechin, Rosneft’s CEO, has been busy. Most observers point to increased cooperation […]

Back To Black: At $50 Oil, Russia Could Soon Be Deficit-Free

4 Jan 2017   Russia

Thanks to non-oil budget income, Russia has entirely offset the negative effects from lower oil prices in 2016, Finance Minister Anton Siluanov said at the end of 2016. What’s more, if oil prices keep their current levels, the country could turn into the black by 2019 or even earlier. The deficit-free scenario for 2019 uses base-line international oil prices of US$45 a barrel, so growth could come earlier if the OPEC agreement leads to prices consistently higher than $50, closer to the US$60 mark or, who knows, possibly even higher. Siluanov has already said that as long as prices stay at US$50, Russia’s budget will get additional revenues of about US$16 billion (1 trillion rubles). In late December, President Vladimir Putin went further, saying that every US$10 rise in oil prices will bring into the federal budget around US$28.6 billion (1.75 trillion rubles) plus another US$12.23 billion (750 billion […]

Russian oil output in December stays at record highs

2 Jan 2017   Russia

Russian oil production in December stood unchanged at 11.21 million barrels per day (bpd), flat month on month and at its highest in almost 30 years, energy ministry data showed on Monday. Russia is preparing to cut output by 300,000 bpd during the first half of 2017 as a part of a global pact with OPEC aimed at rebalancing the market. Oil prices ended at $56.82 last year, more doubling from lows hit early last year. In tonnes, production rose to 47.402 million in December from 45.884 million in November. In 2016 in total, output reached 547.499 tonnes, or 10.96 million bpd, up from 10.72 million in 2015. <O/RUS1> According to preliminary data, which excludes some producing units at some firms, output month on month was slightly down at Rosneft, including Bashneft, and at Gazprom […]

Gazprom offers loan for Turkish gas pipeline

31 Dec 2016   Russia, Turkey

Russian energy company Gazprom said it approved financing of up to $320 million to help build a natural gas pipeline planned through Turkey. Russian news agency Tass reported that Gazprom approved a 3.5-year loan to aid the construction of the planned Turkish Stream pipeline. Funds target construction, purchase contracts and general administrative expenses. Gazprom is looking at Turkey as an alternative to Ukraine, through which most of the Russian gas pipelines run. Geopolitical issues associated with Ukraine make legacy routes risky and Turkey’s geographic position makes it desirable as a bridge to transport energy resources from Central Asian suppliers to the European market Turkish Stream, which mirrors the route for the now-abandoned South Stream project, would run under the Black Sea to Turkey and then to the European market. South Stream was scrapped because of concerns about Russian business practices expressed by some European […]

Russia’s finance minister sees growth ahead

30 Dec 2016   Russia

With oil prices recovering, growth in the Russian economy may be twice as high as official government estimates, the country’s finance minister said. The Central Bank of Russia this week reported a net contraction for full-year 2016, though the level of decline has been less severe in the latter half of the year. The oil-dependent economy faced dual strains from the low price of oil and economic sanctions, but Russian Finance Minister Anton Siluanov said the overall outlook has improved. Speaking with state broadcaster Rossiya, the minister said his projections for growth were better than the official expectation for gross domestic product of 0.6 percent in 2017. “We believe this figure may be almost twice as high — about 1-1.2 percent — fairly feasible rates of economic growth,” he said. In a year-end press conference, Russian President Vladimir Putin referenced figures closer to official […]

OPEC, Russia talk gives oil prices a boost

28 Dec 2016   OPEC, Russia

A year-end gain in crude oil prices on the first full trading day after the Christmas holiday was boosted by OPEC and signals from a top Russian oil producer. Crude oil prices have edged higher since late November when members of the Organization of Petroleum Exporting Countries agreed to production cuts starting in January. Oil prices had dropped below $30 per barrel on supply-side strains and the agreement is designed to bring balance back to the market more than prop up crude oil prices. Most analysts see few reasons to doubt major producers like Saudi Arabia will deviate from their commitments, which would account for the bulk of what OPEC plans for production cuts. Last week, Russian President Vladimir Putin himself vowed to respect the terms of an agreement that counts on non-OPEC members for a good deal of the managed declines. The […]

Russian oil company says production is up

28 Dec 2016   Russia

As supply-side issues weigh on oil markets, Russian oil producer Gazprom Neft said its production for the year was up more than 7 percent from 2015. The company, the fourth largest oil producer  said in a summary statement its full-year production was expected to reach 650 million barrels of oil equivalent. At a time when Russia is expected to contribute to the bulk of a planned production cut next year, the company’s output would be 7.7 percent higher than 2015 if estimates are accurate. Members of the Organization of Petroleum Exporting Countries agreed to cut production by about what it expects in demand growth next year. Most of that cut depends on non-member state cooperation and relies in large part on Russia to be effective at easing the supply-side strains that dragged oil prices to below $30 per barrel in early 2016. […]

Putin says Russia will cut oil output, cooperate with OPEC as planned

24 Dec 2016   Russia

Russia will cut crude oil output and will cooperate with OPEC to support global oil prices, President Vladimir Putin said at his end-of-year news conference on Friday. Putin said he hoped oil prices would stabilize at current levels, above the average oil price of $40 per barrel factored into Russia’s budget. Putin said the country’s oil-dependent budget would receive an extra 1.75 trillion rubles ($28.65 billion) next year if oil prices averaged $50 per barrel. (Reporting by Katya Golubkova, Vladimir Soldatkin and Denis Pinchuk; Writing by Andrey Ostroukh; Editing by Andrew Osborn)

Putin: We’re not a member of OPEC

24 Dec 2016   Russia

Russia’s president said his country would meet its obligations in terms of crude oil production, but stressed Friday that Russia is not a member of OPEC. Russia is on pace to average about 11 million barrels of oil production per day this year, about 1.8 percent higher than last year. If accurate, Russian production for the year would be at or near a post-Soviet record. Members of the Organization of Petroleum Exporting Countries agreed to cut production by about what it expects in demand growth next year. Most of that cut depends on non-member state cooperation and relies in large part on Russia to be effective at easing the supply-side strains that dragged oil prices to below $30 per barrel […]

Russia’s Deadly Mideast Game

23 Dec 2016   Middle East, Russia

With its devastating show of force in Syria’s civil war, Russia has reasserted itself as a military power in the Middle East. It’s also put Russians in the region at mortal risk, as the Dec. 19 assassination of Andrey Karlov, Russia’s ambassador to Turkey, proves. Karlov is a casualty in the Kremlin’s quest for power and influence in the region. Karlov’s murder—by a gunman who screamed opposition to the siege of the Syrian city of Aleppo before he himself was killed—is likely to draw Ankara and Moscow closer because of shared security concerns over the spillover of the Syrian conflict. Vladimir Putin’s regional clout goes far beyond Syria, however, and is aimed at restoring the influence that waned after the fall of the […]