Russia and FSU – Dec 18 / Jan 19

Published at 11:24 4 Feb 2019 by . Last edited 11:18 22 Aug 2019.

Russian oil production eased m/m by 70 thousand b/d to 11.38 mb/d in January but was still higher y/y by 0.43 mb/d. Russia has agreed to reduce supply by 0.23 mb/d from the 11.42 mb/d pumped in October 2018 but we expect this to be gradual and only achieved by April.

Russian crude exports fell by 0.23 mb/d m/m in January to 3.93 mb/d, still higher y/y by 0.16 mb/d. Actual exports were even lower than loading schedules due to weather delays, with Black Sea Urals and Siberian Light exports falling to just 0.46 mb/d. Exports from Novorossiysk have been delayed by three-six days since mid-January, with only 60% of the month's total loadings being exported. The current February export programme is much shorter, partly driven by maintenance at Primorsk but also to catch up on the delayed cargoes from January.

Kazakhstan’s December output fell back slightly from November’s record high to 1.88 mb/d, higher y/y by 70 thousand b/d. We expect Kazakh output to increase y/y in 2019, by 60 thousand b/d, to average 1.9 mb/d, driven by record production from Tengiz. Azerbaijan’s December crude and condensate output declined slightly both m/m and y/y to 0.79 mb/d. Growth in condensate from the Shah Deniz complex is offsetting persistent declines at the ACG complex, Azerbaijan’s largest field. BP plans to carry out maintenance on two platforms at the ACG complex across the year, which, depending on the severity, could mean a sharp decline in Azeri output.

FSU demand rose by 0.18 mb/d y/y to 5.1 mb/d in December, led by Russia. Final data show Russian oil demand rose by a strong 0.18 mb/d y/y in November, supported by growth across the barrel. Fuel oil demand rose by 65 thousand b/d y/y and Jet kerosene demand by 25 thousand b/d, in line with very strong growth in passenger air traffic (+13.8% y/y).

FSU December runs were flat m/m at 6.83 mb/d (+40 thousand b/d y/y), despite planned CDU works falling y/y by 0.1 mb/d to 0.2 mb/d. Russian throughputs rose m/m by 85 thousand b/d to 5.9 mb/d (+0.11 mb/d y/y), driven by a 0.15 mb/d m/m fall in offline CDU capacity but the rise was capped by weak simple refining margins, which are weighing on runs in Q1 19.

ULSD exports out of Antipinsky in December 2018 were 50% lower than expected (90 thousand tonnes versus 0.18 Mt scheduled) as refining at the plant was stopped over 5–16 December 2018 for lack of crude due to financial issues. New Stream resumed processing on 17 December, after securing a new line of credit from Sberbank, and is scheduled to export 0.12 Mt of 10 ppm diesel via Primorsk in January. Total Primorsk ULSD exports in January were scheduled to be 1.48 Mt in January, with February exports set to be 5.9% higher m/m on a daily basis.

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