Russia and FSU – Aug / Sep 2018

Published at 09:03 2 Oct 2018 by . Last edited 11:18 22 Aug 2019.

Russian oil production rose m/m to a record 11.36 mb/d in September, 0.44 mb/d higher y/y. The m/m gains were led by Rosneft and PSA ventures, which each raised supply by 60 thousand b/d. Rosneft raised output at Yuganskneftegaz to a record high of 1.42 mb/d in August, and likely again in September. We forecast 2019 growth of 0.2 mb/d as new projects start and ramp up.

Russian exports totalled 4.8 mb/d in September, higher y/y by 0.27 mb/d, but lower m/m by 50 thousand b/d, due to maintenance at Primorsk between 18-22 September. October exports are set to rise, following two injection cargoes mid-month from Rosneft and Surgutneftegaz. Baltic Urals exports from Primorsk will total 0.81 mb/d, higher m/m by 17%, while Ust-Luga loadings will total 0.60 mb/d, up by 20% m/m. Demand for Urals remains strong as a substitute for Iran.

Kazakhstan’s output fell m/m by 0.18 mb/d in August to a 22-month low of 1.67 mb/d and was lower y/y by 14 thousand b/d. The decline was led by Tengiz (-0.16 mb/d), while Kashagan (-50 thousand b/d) also fell, partially offset by higher output at smaller fields.

Azerbaijani August crude output was flat m/m at 0.77 mb/d, but still higher y/y due to a low maintenance-affected base. While the Shah Deniz condensate project is ramping-up, production is struggling to rise beyond 0.8 mb/d owing to decline at existing platforms at the ACG complex.

FSU demand remained robust in August, higher y/y by 0.12 mb/d at 5.01 mb/d, led by Russia. Final data show Russian oil demand increased by 70 thousand b/d y/y in July, led by fuel oil and diesel. Russian diesel demand continues to find support from industrial production, which rose by 2.7% y/y in August, bringing year-to-date average growth to 3.1%.

FSU August runs were lower m/m by 0.31 mb/d at 6.72 mb/d (+83 thousand b/d y/y), as offline CDU capacity rose by 0.16 mb/d m/m to 0.54 mb/d. Russian throughputs eased m/m by 0.22 mb/d from July’s record-high to 5.78 mb/d, higher y/y by 79 thousand b/d. In Q3 18, we estimate FSU runs will increase y/y by almost 0.2 mb/d to 6.7 mb/d, with planned CDU maintenance peaking in September at 0.72 mb/d (-0.61 mb/d y/y).

ULSD exports from Primorsk were slated at 1.17 Mt (0.29 mb/d) in September, lower m/m by 0.15 Mt but up by 0.31 Mt y/y. The fall was due to Lukoil’s deliveries slipping to just 40 Kt in September due to planned catalytic cracker maintenance at the Nizhny Novgorod refinery. Deliveries from Surgutneftegaz in September were expected to be 0.39 Mt—flat m/m vs August’s already maintenance-capped volumes. October exports are set to fall by 9% m/m.

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