Russia and FSU – Sep / Oct 2018

Published at 08:52 2 Nov 2018 by . Last edited 11:18 22 Aug 2019.

Russian oil production in October rose to 11.41 mb/d, higher m/m by 40 thousand b/d and y/y by almost 0.5 mb/d. Output was 0.18 mb/d above the October 2016 baseline used for the OPEC/non-OPEC production deal. Rosneft’s output breached 4 mb/d for the first time on record, higher y/y by 0.18 mb/d. We expect output to average 11.5 mb/d across 2019.

Russian crude exports rose sharply m/m by 0.34 mb/d to 5.14 mb/d in October (+0.34 mb/d y/y), amid seven injection cargoes due to higher production and heavy refinery maintenance. November exports are set to fall by nearly 7% m/m even with one injection cargo added. Baltic Sea Urals exports are scheduled at 1.3 mb/d, lower m/m by 11%, while Urals and Siberian Light exports from Novorossiysk are set to be 5% lower m/m. Lower exports, higher refinery demand as maintenance ends and soaring fuel oil cracks should support Urals differentials, which we expect to trade to parity or premium to Forties.

Kazakh output recovered to 1.8 mb/d in September (+0.13 mb/d m/m), higher y/y by 71 thousand b/d as Tengiz recovered from maintenance. Kashagan output recovered to 0.28 mb/d in September and is believed to have ramped up to 0.33 mb/d in October.

Azerbaijan’s September crude and condensate output rose to 0.8 mb/d, supported by rising condensate supply. Output is expected to drop in November, however, with BTC loadings suggesting platforms at the ACG complex will go offline for maintenance.

FSU demand remained robust in September, higher y/y by 0.22 mb/d at 5.05 mb/d, led by Russia. Final data show Russian oil demand increased by 0.16 mb/d in August, led by fuel oil which rose by 65 thousand b/d.

FSU September runs were lower m/m by 0.19 mb/d at 6.52 mb/d (+0.21 mb/d y/y) as offline CDU capacity rose by 0.18 mb/d m/m to 0.73 mb/d. Russian throughputs slipped m/m by 66 thousand b/d to 5.71 mb/d, driven by a 0.24 mb/d increase in offline CDU capacity, but runs were still higher y/y by 0.30 mb/d.

ULSD exports from Primorsk were just 1.06 Mt (0.25 mb/d) in October, putting flows at an 11-month low (-12% m/m but still 20% higher y/y). Though volumes from Surgutneftegaz returned to a more normal 0.5 Mt after maintenance-hit August and September loadings, Rosneft sent 50% less m/m at just 0.12 Mt. Taif sent no diesel at all to Primorsk amid maintenance at its Nizhnekamsk refinery. ULSD exports are set to rise by 3.3% m/m in November.

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