Russian output inches up

Vladimir Afanasiev

Moscow

Russia's oil and gas industry recorded a minor rise in oil and gas production last year after years of steady growth.

Output levels were helped by the introduction of the latest oilfield recovery methods, rising demand and a favourable market price environment, according to preliminary data from the country’s Energy Ministry.

Oil and condensate production increased by less than 1% to 11.2 million barrels per day last year against 2018, with the total gas output growing by less than 2% to 737.6 billion cubic metres.

State-controlled oil producer Rosneft, in which US supermajor BP has a near-20% interest, retained its leading position in the country, accounting for 39% of total Russian oil and condensate production.

Its nearest competitor, privately held Lukoil, produced 1.7 million bpd of oil and condensate at its fields inside Russia, or about 15% of the total output in the country last year.

State-controlled gas monopoly Gazprom reported a 0.5% increase in gas production to 500.3 Bcm in 2019, the highest output in the last seven years, with the company keeping its share of 68% in the country’s total gas output.

The monopoly said that it saw healthy demand on the domestic market last year. It helped the gas giant to keep its output from falling as exports to its core markets in Europe dropped marginally to 199 Bcm last year.

However, industry analysts said that a significant share of Gazprom’s exports had been stored in underground storage facilities in Europe last year in anticipation of potential supply disruptions because of the company’s disagreements with Ukraine on the terms of continued gas transits in 2020.

About 88 Bcm of gas were reported to be available in European storage at the beginning of January, according to reports.

Gazprom, led by executive board chairman Alexei Miller, is expected to have a challenging first quarter this year as it has to sell accumulated gas from European storage at prices that are already falling because of mild winter temperatures and lower than usual energy demand in Europe.

While Russian oil exports increased by more than 3% to 5.3 million bpd in 2019, the country's production is also expected to be negatively affected by lower energy demand in Europe in the first quarter, according to analysts.