Oil and gas industry

In 2019 extraction of minerals brought 12.6% to the Russian GDP (-0.6% yoy). The oil and gas share in total income of the Federal Budget of Russia decreased from 46% in 2018 to 39% in 2019, as a result of decline of Urals oil price from US$ 70 per barrel to US$ 64 per barrel. Yet, the oil price was sufficient to ensure the funding of the Russian Budget and further CAPEX of oil and gas companies. Russian oil industry consists of a number of large players, 5 largest companies account for 3/4 of country’s oil production and refining, while Gazprom is the major gas company in Russia. About a half of the oil produced is processed at the Russian refineries, while the other half is exported.

Top oil producers in Russia, 2019 <span> </span>

Top oil producers in Russia, 2019

Top petroleum refiners in Russia, 2019<span> </span>

Top petroleum refiners in Russia, 2019

Upstream

The overall situation on the oil market remained stable in 2019. Russia increased its production of oil to 560.3 million tons in 2019 (+0.9% yoy). During the year, the country’s well stock increased from 181.7 thousand units to 187.1 thousand units (+3% yoy). The total measured drilling depth declined by 1% yoy to 28.4 thousand meters.

Total investments in oil & gas production increased by 7% yoy in 2019, to Rub 2 trillion.

In 2019, 569 wells on new oilfields (not older than five years) were put into operation, including newly launched the Zapadno-Erginskoye, the Traygorodsko-Kondakovskoye and the Lenskoye fields.

Natural gas extraction in Russia hit the 2018-year record – 737.59 bcm were produced (+1.7% yoy), the average export prices declined by 17% yoy to US$ 205 bcm, because of growing competition from LNG producers.

In 2019, Gazprom launched the Chayandinskoye gas field – one of the largest fields in Eastern Siberia and continued development of a number of other large projects, including the Kovyktinskoye field and the Achimov deposits of the Urengoyskoye field.

Crude oil production in Russia (incl. gas condensate) and Urals oil price dynamics, 2014-2019 <span></span>

Crude oil production in Russia (incl. gas condensate) and Urals oil price dynamics, 2014-2019

Natural and petroleum associated gas production in Russia and average export price of gas, 2014-2019<span></span>

Natural and petroleum associated gas production in Russia and average export price of gas, 2014-2019

Midstream

As Russian oil fields and gas fields are widespread across the country, Russia has the largest oil and gas pipeline networks in the world, which has been significantly developed during the last ten years.

Transneft is the major operator of the Russian oil trunk pipeline system (51,600 km) and oil-product trunk pipeline system (16,700 km). The annual CAPEX in the oil transport system exceeded Rub 266.7 billion in 2019 (+3% yoy).

The total length of the Russian gas transportation system is ~172,600 km; the only operator of gas pipelines is Gazprom. In 2019, Gazprom launched the Power of Siberia that will supply gas to China, finalized works on the Turk Stream, and continued construction of other pipelines, such as a part of the Sakhalin-Khabarovsk-Vladivostok and the Ukhta-Torzhok (Yamal) pipelines.

Downstream

There are 39 large oil refineries in Russia with total crude oil distillation capacity of 0.8 million tons per day. Rosneft, the leading Russian oil company, is the largest refinery operator owning 12 major refineries. LUKOIL, with 4 major refineries, is the second-largest refineries operator. In Russia, primary oil processing reached 285.1 million tons, a decrease by 0.6% yoy, compared with 2018. The depth of processing remained 83 percent, at the level of 2018.

In 2019, total CAPEX in oil & gas downstream grew by 28% yoy to Rub 0.5 trillion.

Primary oil processing volume and processing depth in Russia, 2014-2019 <span></span>

Primary oil processing volume and processing depth in Russia, 2014-2019


A number of future projects on the modernisation of oil refineries as well as new construction are planned on the horizon until 2025. Examples of projects include the construction of new units at Taneco (Tatneft), Khabarovsk refinery (NNK), Orskneftegazsyntez (Safmar).

In 2019, seventeen large gas-processing plants in Russia (processing over 1 bcm per year each) and nineteen smaller plants processed in total 122.37 bcm of natural gas and petroleum associated gas (+13.4% yoy). The main trend in gas processing is the steadily increasing share of LNG production. The volume of LNG produced in Russia reached 29.5 mt compared with 19.8 mt the previous year (+49% yoy). The largest LNG projects include the Yamal LNG and the Arctic LNG-2 (NOVATEK).



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