Russian oil output was steady m/m at 10.95 mb/d in July (95% compliance), higher y/y by just 70 thousand b/d. By September, we expect production to move lower y/y. While Gazprom Neft’s output rose, production fell at Rosneft, Bashneft and Surgutneftegaz’s operations.
Russian crude exports were fairly steady m/m at 4.66 mb/d in July, higher y/y by just 30 thousand b/d, the slowest pace of growth since December 2014. Total FSU crude exports fell y/y in June by 0.19 mb/d and should have remained low in July too. But, Urals exports are set to rise in August as refinery works grow, though works on the Sakhalin project should temper September Sokol exports. Low Russian crude exports have pushed Urals differentials to a four-year high.
Azeri crude output rose m/m to 0.79 mb/d in June, although y/y declines remained elevated at 71 thousand b/d. Compliance fell to 56% as output was only 19 thousand b/d lower vs the 35 thousand b/d Azerbaijan agreed to reduce supplies by. Exports rose m/m by 28 thousand b/d.
Kazakhstan’s crude production rose m/m by 27 thousand b/d in June to 1.73 mb/d, higher y/y by 0.17 mb/d. Output rose further in July, with Kashagan output above 0.2 mb/d by month-end. ENI has suggested that Kashagan’s output will hit 0.37 mb/d by year-end but this will be offset somewhat by maintenance, with Tengiz output set to fall by 0.1 mb/d (c. 20%) this month and Karachaganak’s by 0.1 mb/d (44%) in September. In October, works at sour gas reinjection facilities will impact both fields, and we expect it to hit other fields, including Kashagan.
FSU June demand rose seasonally m/m to 4.8 mb/d, higher y/y by 14 thousand b/d. Final May data for Russia pegged demand at 3.6 mb/d, a three-month high and the second consecutive month of y/y growth above 0.18 mb/d. Gasoil demand was higher y/y by 75 thousand b/d.
FSU June runs rose m/m to 6.75 mb/d but were lower y/y by 16 thousand b/d, even though Russian runs rose y/y by 70 thousand b/d at 5.71 mb/d. But runs in Kazakhstan (-30 thousand b/d) and Belarus (-57 thousand b/d) fell amidst seasonal refinery maintenance, dragging down total FSU runs. Russian maintenance will be higher y/y in both September and October.
Scheduled exports of ULSD from the Baltic port of Primorsk were down marginally y/y in June at just under 0.29 mb/d. Slated exports in July are lower m/m by 17 thousand b/d at 0.27 mb/d, though this is a healthy 22 thousand b/d higher y/y. The company will convert sections of an oil pipeline to carry diesel that will lift capacity to 25 Mtpy. Separately, deliveries of diesel to the port of Ventspils (Latvia) are expected to rise from around 0.15 Mt in June to 0.23 Mt in July.