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Russian oil production was lower m/m by 20 thousand b/d at 11.23 mb/d in October and lower y/y by 0.19 mb/d. But, output remained higher than the OPEC+ target of 11.19 mb/d as Russia failed to manage rising condensate production from its gas fields ramping up for the winter. Year-to-date output has averaged 11.25 mb/d, higher y/y by 0.13 mb/d, and we expect Q4 19 output to average a similar level.
Russian crude exports were higher by 0.25 mb/d m/m in October at 5.34 mb/d. Ust-Luga loadings recovered to typical levels (0.72 mb/d) after the logistical bottlenecks stemming from Urals contamination issues from June to September, while ESPO exports hit a record 0.74 mb/d in October, although they will drop in November due to maintenance at Kozmino. Refineries returning from maintenance coupled with stronger domestic crude prices versus export prices are set to reduce November exports to their lowest levels in more than a decade. Preliminary loading programmes are lower across all grades except Siberian Light, with the total Russian programme reduced by 0.69 mb/d m/m and by 0.35 mb/d y/y.
Kazakhstan’s crude supply remained subdued at 1.77 mb/d (-20 thousand b/d y/y) in September. Lower Karachaganak output (-0.13 mb/d m/m) was offset by post-maintenance ramp-up at Tengiz and Kashagan. Preliminary October output indicates a recovery in total production led by higher Karachaganak output. However, Kashagan output (which produced at record levels in September) was reduced by 75 thousand b/d for 10 days. Azerbaijan’s September crude and condensate output was flat m/m and y/y at 0.75 mb/d, in compliance with the OPEC+ agreement.
FSU demand grew by a strong 0.25 mb/d y/y to hit 5.23 mb/d in September. Final Russian data show y/y growth of 0.22 mb/d in August, helped by higher transport fuel demand, but the weak macro backdrop leaves us sceptical of that data.
FSU runs fell m/m by 0.4 mb/d to 6.7 mb/d (flat y/y) in September amid a sharp rise in planned CDU works (+0.39 mb/d m/m). Russian CDU maintenance rose m/m by 0.34 mb/d, including the 0.12 mb/d CDU at Gazpromneft’s Salavat refinery and a turnaround at Rosneft’s 0.17 mb/d Syzran refinery. Belarusian runs were weighed down by works at Belneftekhim’s 0.19 mb/d Mozyr refinery, where a new 60 thousand b/d hydrocracker is being fitted. The drop in Russian crude exports suggests Belarusian runs could be weak in November and December.
Despite our expectations that Russian runs will drop m/m in October, scheduled Primorsk ULSD loadings for the month are 70 thousand b/d higher m/m at 0.26 mb/d (-23 thousand b/d y/y) as Russia refineries in the region returned to normal operations. Preliminary November loadings are set to be up by 39 thousand b/d m/m at 0.30 mb/d on higher runs.