the impacts of western restrictive measures on russia's ... · russia’s liquids production...

The impacts of Western restrictive measures on Russia's oil and gas sectors

Centre Energie - Centre for Energy

1

Marc-Antoine Eyl-Mazzega

Director, Centre for Energy

Eni - Brussels, 18/04/2018

Russia’s economy was already in recession before the sanctions, came out of recession in spite of the sanctions

2

Russia’s GDP and the oil price, 2002-Q1 2018

Source: Rosstat, Ministry of Finance of the Russian Federation

Russia’s liquids production breaks all records, further growth only limited by OPEC+ in 2017 and 2018

3

Russia’s GDP and the oil price, 2002-Q1 2018

Source: Ministry of Energy of the Russian Federation, Rosneft, Sberbank Investment Research, Ifri

Rosneft’s liquids output, 2014-2017 (including Bashneft in 2017)

10,6

10,8

11

11,2

11,4

11,6

11,8

Russia's 2014total liquids

output

Russia's 2015total liquids

output

Russia 2016total liquids

output

Russia'sOctober 2016

liquidsproduction cut

basis

Russia's 2017total liquidsoutput level

with 12months OPECcut and 85%

full compliance

Russia's 2017Etotal liquids

output level ifno OPEC cut

mb/d

Russia’s gas exports to Europe at record high levels, Gazprom developing Nord Stream 2, Turkish Stream, Power of Siberia

4

Gazprom’s exports to Europe and EU’s LNG imports, 2007-2017

Source: Gazprom, Platts

Yamal LNG : extreme environment yet on schedule, no cost overruns…

5

Russia’s GDP and the oil price, 2002-Q1 2018

Source: Total

?

6

Russia’s oil majors raising capex against all odds

7

Evolution of capex of Russian majors versus some IOCs, 2014-2017

Source: Shell, ExxonMobil, Rosneft, Gazprom, Lukoil, Sberbank Investment Research; *

Rosneft includes Bashneft as from 2017

Increasing production drilling, growing share of horizontal drilling > 34% in 2017

8

Evolution of production drilling by leading Russian oil producers, 2013-2016

Source: Company data, Deloitte

Ruble depreciation > fall in $ oil prices, leading to a positive impact on revenues and capex as companies export

9

Evolution of RR and $ Ural prices, Q1 2014-Q1 2018

Source: Thomson Reuters, Rosneft

Russia’s oil production benefiting from tax advantages as new greenfields and NGLs expand output

10

Evolution of Russia’s fiscal reserve funds, Dec.2014-Feb-2018

Source: Ministry of Finance of the Russian Federation, Vedomosti, Vygon Consulting

Variation of the fiscal pressure on Russia’s oil sector

Russia’s fiscal reserves were a buffer for falling oil and gas incomes, but the Reserve fund is depleted

11

Evolution of Russia’s fiscal reserve funds, Dec.2014-Feb-2018

Source: Ministry of Finance of the Russian Federation

Centre Énergie – Centre for Energy

eylmazzega@ifri.org

27, rue de la Procession, 75740 PARIS CEDEX 15Tél. +33 (0) 1 40 61 60 00 • Fax : +33 (0) 1 40 61 60 60

www.ifri.org

12