Russian oil production was flat m/m at 11.15 mb/d in July (lower y/y by 60 thousand b/d), recovering sharply from the first half July average of 10.9 mb/d, which was due to Transneft refusing to take around 3.5 Mt (26 mb) of oil from Rosneft’s subsidiary Yuganskneftegaz into the Russian pipeline network. Transneft moved around 25 mb of tainted Urals into pipeline and storage within Russia and this is severely hampering the flexibility of the pipeline system. Even if Russia can resume full supplies on the Druzhba pipeline by end-Q3 19, it will face difficulties achieving production over 11.2 mb/d given the logistics of cleaning the system.
Russian crude exports rose m/m by 0.16 mb/d in July to 5.03 mb/d as flows on the Druzhba pipeline ramped up to 0.95 mb/d, just short of the typical 1 mb/d flow rate. Preliminary schedules peg Baltic Urals exports at 1.28 mb/d in August, with Primorsk set to load 49 cargoes, unchanged m/m. Ust-Luga is set to load just six cargoes, compared to the usual 29. The need to store contaminated crude in a section of the Druzhba pipeline has curtailed supply to Ust-Luga. Black Sea Urals and Siberian Light exports scheduled are lower m/m at 0.69 mb/d in August.
Kazakhstan’s crude supply rose y/y by 68 thousand b/d to 1.90 mb/d in June, supported by record output from Kashagan (0.35 mb/d). Kashagan output breached 0.4 mb/d since returning from maintenance after a debottlenecking project raised capacity to 0.42 mb/d. Supply is likely to have remained elevated in July, but will fall in August as Tengiz and Karachaganak undergo maintenance. Azerbaijan’s crude and condensate output fell m/m to 0.77 mb/d in June (-24 thousand b/d y/y). Having risen for 15 months, led by Shah Deniz condensate, Azeri output declined by 50 thousand b/d y/y in Q2 19, the fastest fall in two years.
FSU demand rose by 45 thousand b/d y/y to 4.67 mb/d in June, with growth slowing on the back of weak Russian demand. Final Russian data show growth in May eased to 90 thousand b/d as y/y growth in industrial production softened. Economic activity picked back up in June, however.
FSU runs rose m/m by 0.4 mb/d to 6.6 mb/d in June (-0.2 mb/d y/y). The growth in runs was due to a 0.37 mb/d m/m fall in CDU works to 0.64 mb/d as works at several Russian refineries were completed by end-May, with runs rising m/m by 0.46 mb/d to 5.64 mb/d (-0.20 mb/d y/y) in June.
Russian ULSD exports from Primorsk are set at just 0.76 Mt in August, a 28% m/m fall, amid planned maintenance at the Kirishi refinery and lower exports by Rosneft. However, the 0.18 mb/d Antipinsky will resume exports this month, shipping at least 0.1 Mt of diesel from alternative Baltic ports including Vysotsk and St Petersburg.