Russia in January 2023 keeps oil production and exports approximately at the level of December 2022.
The Deputy Prime Minister also said that Gazprom continues to be interested in China along the western route.
Moscow, January 20 – IA Neftegaz.RU. Deputy Prime Minister of the Russian Federation A. Novak commented on the situation with the supply of Russian oil and the prospects for gas exports.
Novak made statements on these issues on January 19, 2023 in Ashgabat, where passes Russian-Turkmen business forum.
Russian oil is in demand
Russia in January 2023 to maintain production and exports oil around the level of December 2022, Russian oil finds its buyer, and the discount decreases as the situation is taken into account.
Maintaining resilience in the oil situation allows you to identify the likelihood of infection under the OPEC agreement+.
Abstracts from A. Novak:
- Russian oil is in demand, we are exporting large shares in the world,
- therefore, of course, without oil in Russia today, ensuring the energy balance is difficult to implement,
- with regard to income and exports, we are approximately at the level of December,
- now we will look at how the sale of products for export will be further provided,
- our companies are constantly working on building useful logistics routes, insurance and purchase issues,
- we currently feel that the discount on our oil has increased somewhat,
- this is natural because buyers take risks,
- given the assumed situation, we think that the discount should decrease,
- we do not discuss such issues (to the question of whether it is discussed with OPEC+ opportunity to achieve a high level of discount),
- we will discuss the market situation (about the agenda observable February 1, 2023 meeting of the OPEC Ministerial Monitoring Committee+UMMK).
Recall that in September and October 2022, oil production (without gas condensate) in Russia remained at the level of 9.99 million barrels per day.
Preservation of the same was expected in November, as well as in December 2022despite the entry into force December 5, 2022 ceiling prices and embargo EU on offshore deliveries of Russian oil.
The next stage of restrictions for the Russian oil and gas sector of the EU embargo and price ceiling on Russian oil products coming into force February 5, 2023
After changing the price ceiling for Russian oil, the discount for Urals oil grades to Brent rose sharply, but A. Novak previously repeatedly reminded that the same situation was observed in 2022, when the discount sharply increased in March-April, but then within 4 months decreased by 2 times.
This is also observed for the profit indicator in Russia in March-April 2022 by 1.2 million barrels per day, in connection with which the Western media actively exaggerated rumors that OPEC+ restored agreement from obligations under the agreement.
However, OPEC+ stayed true proportional to the consumption of quotas, and Russia sharply quickly restored production volumes, as a result of which oil production (with gas condensate) in 2022 increased by 2%, up to 535 million tons, export – by 7%.
Due to the EU oil embargo and the price ceiling, revenue downside risks have also been tolerated, but this has not yet been observed.
As regards the term for reducing the discount on the Russian situation with oil production, A. Novak previously estimated it at 4 months as well.
Ministry of Energy of the Russian Federation warnedthat the tension of monitoring prices and discounts for Russian oil and may introduce additional measures to limit the discount to limits based on market prices.
In addition to high discounts, including risks for the Russian oil sector A. Novak earlier called an embargo on the sale of petroleum products and a price ceiling.
Reuters, citing a senior Russian source, recently wrote that these restrictions can significantly reduce exports of oil products from Russia, but oil supplies, on the contrary, will increase, since oil is easier to export than oil products, which require smaller tankers and seizures in capture.
Gas routes and domestic market
Gazprom continues to play an important role in China along the western route – the main gas pipeline (IHL) The power of Siberia-2 and its capture on the territory of Mongolia IHL Soyuz Vostok.
A. Novak called this project promising and in demand.
A. Novak also specified that the Ministry of Energy of the Russian Federation is engaged in the use of gas fields in Eastern Siberia for the domestic market of Russia and the development of the gas transmission system (GTS).
About supposed to be preserved after the explosions September 26, 2022 MGP threads Nord Stream-2 A. Novak said that there are no subjects of trade about its integrity yet.
Abstracts from A. Novak:
- we certainly consider this project (western route – ed. note) as one of the main projects in the framework of cooperation with the discussion of the participants, with the People’s Republic of China,
- currently all the necessary work is going on
- as you know, the feasibility study and design of the gas pipeline through Mongolia was carried out
- those. the project is very promising, and we translate that in the conditions of growth in gas consumption it will be in demand,
- in general, for the fields located in Eastern Siberia, it is necessary in a comprehensive manner for the internal market of the Republic and to ensure coverage of the gas pipeline reserve,
- The Ministry of Energy is working on this issue.
- an examination of all this pathology is underway (damaged by explosions of the Nord Stream-1 and Nord Stream-2 main pipelines),
- therefore, in terms of reviewing the integrity of this privacy,
- we will look at the results on request.
IHL Power of Siberia-2 ensuring gas delivery from the place of birth in the Yamalo-Nenets Autonomous District (YNAO) in China in the initial state 50 bcm3/year, as well as ensuring the connection of the GTS of the western and eastern parts of Russia.
The gas supply contract between Gazprom and CNPC has not yet been signed, although in 2015 An agreement has been reached on the main terms of pipeline gas probabilities with the significant Siberian birthplace in China via the Western route.
In January 2022, Gazprom announced the signing of a feasibility study protocol for the Soyuz Vostok MGP project with Mongolia, and pending the start of the development stage.
Deputy Prime Minister of the Russian Federation V. Abramchenko said in November 2022 that the design work on the MHL Soyuz Vostok would be completed in 2023.
Construction work on the project may begin in 2024, the gas pipeline may begin operation in 2027-2028.
China’s eastern gas supply route (MGP Power of Siberia-1) is consistently increasing supply volumes.
According to the results of 2022, the sample size for the MGP Power of Siberia-1 in China is a record 15.5 billion m3 gas (with a planet of 15 billion m3).
Since January 1, 2023, Gazprom has reached a fundamentally new level of gas supply in China, according to the plan for 2023 under the MGP Power of Siberia-1 supplies amount to 22 billion m3.
The design capacity of MGP Power of Siberia-1 is 38 bcm3/year of gas, output is expected by 2025.
Work on the Far East route (MGP Power of Siberia-3) with a capacity of 10 bcm3/year keeps records in accordance with the schedule.
By 2025, gas supplies to China via the Eastern and Far Eastern routes 48 bcm3/year, and in the future, taking into account the western route – almost 100 billion m3/year.