Russian oil output rose marginally m/m to 10.94 mb/d in November (97% compliance), but output was lower y/y again, by a hefty 0.27 mb/d. In 2018, Russian output should be broadly flat y/y following the recent decision by OPEC and non-OPEC to extend the cuts through the year, although if markets tighten, output can rise in H2 18.
Russian crude exports fell to 4.71 mb/d, lower y/y by 0.19 mb/d in November, as refinery maintenance ended. Seaborne crude exports from Russian Baltic and Black Sea ports are set to decline by 10% m/m to 1.79 mb/d in December. Baltic Sea exports will fall by 5% m/m while Black Sea exports will fall by 21% to just below 0.5 mb/d. In 2018, we expect more eastbound flows.
Azeri crude output was pegged at 0.8 mb/d in October, and reversed back into a slight y/y decline after registering growth in September. However, output was still higher m/m and continues to recover following heavy maintenance in August. The addition of wells at the ACG complex is likely to have contributed, with field level data showing output stable q/q at 0.59 mb/d in Q3 17.
Kazakh output fell m/m by 30 thousand b/d in October to 1.69 mb/d (+43 thousand b/d y/y). Problems at Kashagan drove output lower by 17 thousand b/d m/m. Gas-re-injection which was supposed to drive volumes to phase one capacity of 0.37 mb/d by year-end has encountered problems and output remained below 0.2 mb/d in November. CPC exports will hit a record 1.32 mb/d in December, although this marks a downward revision from the preliminary schedule.
FSU October demand was higher y/y by 90 thousand b/d at 4.8 mb/d. Final data show Russian demand rose by 60 thousand b/d y/y in September, although LPG and naphtha deliveries contracted, by 20 thousand b/d and 30 thousand b/d respectively, as white goods demand remains anemic. In contrast, diesel demand rose.
FSU runs increased marginally m/m by 22 thousand b/d to 6.46 mb/d in October, higher y/y by 41 thousand b/d, while offline CDU capacity rose to a record 1.38 mb/d in October (+0.59 mb/d y/y). The rise in CDU outages was led by Russia, higher by 50% y/y at 1.24 mb/d. However, Russian runs were flat y/y at 5.55 mb/d. Planned refinery maintenance in Russia included a 0.18 mb/d CDU at Gazprom Neft’s Omsk 0.18 mb/d and a 0.14 mb/d CDU at Rosneft’s Saratov plant.
ULSD exports from the Baltic port of Primorsk were scheduled to rise m/m by 10 thousand b/d to 0.22 mb/d in November (-50 thousand b/d y/y and -0.11 mb/d vs peak summer flows), but could be lower given pipeline delivery problems to the port from the Nizhny Novgorod refinery. In 2018, Russian diesel exports via the Black Sea should rise as the Yug diesel pipeline starts up.