- •Contents
- •Foreword
- •Industry snapshot
- •Industry snapshot
- •Reserves
- •Oil output
- •Oil output
- •Gas output
- •Gas output
- •Refining
- •Refining
- •Upstream
- •Upstream
- •Oil output
- •Gas output
- •New wells
- •Well-stock management
- •Well productivity
- •Reserves
- •Reserves
- •Oil reserves
- •Gas reserves
- •Reserve replacement
- •Reserve replacement
- •Refining
- •Refining
- •Capacity, throughput, utilisation
- •Light products yield
- •Complexity
- •Complexity
- •Modernisation plans
- •Capex
- •Capex
- •Oil & gas sector capex
- •Crude exports
- •Crude exports
- •Crude exports by market, company and direction
- •Russian crude exports in the FSU context
- •Crude export proceeds
- •Refined products exports
- •Refined products exports
- •Analysis by product
- •Gas balance
- •Gas balance
- •Domestic sales
- •UGSS balance
- •Appendix I: Reserves classifications
- •Appendix I: Reserves classifications
- •Russian reserves definitions
- •Western reserves definitions
- •Appendix II: Pricing
- •Appendix II: Pricing
- •Monthly pricing trends
- •International crude oil pricing
- •Domestic crude oil pricing
- •Domestic product pricing
- •International gas pricing
- •Domestic gas pricing
- •Gas tariffs
- •Appendix III: Regulation and tax
- •Appendix III: Regulation and tax
- •Regulatory overview
- •Licensing
- •Environmental protection
- •Oil and product transportation
- •Transportation costs
- •Typical crude export route costs
- •Volume and price controls for gas
- •Tax regime
- •Mineral Extraction Tax (MET)
- •Crude-export duty
- •Excess profits tax
- •Specific taxes applied to natural gas
- •Taxation of offshore projects – special treatment
- •Appendix IV: Sanctions
- •Appendix IV: Sanctions
- •Summary
- •Appendix V: Who’s Who
- •Appendix V: Who’s Who
- •Key policymakers
- •Company heads
- •Disclosures appendix
vk.com/id446425943
Oil & gas sector capex
Renaissance Capital
20 June 2019
Russian oil & gas
Total oil & gas sector capex was down 1% YoY in dollar terms in 2018, according to Rosstat data and our estimates. Total capex of $57.3bn in 2018 was 41% below the peak 2011 level, mostly due to rouble depreciation and spending cuts by most companies. This is purely an estimate, because Rosstat has repeatedly altered the definition of energysector investment and the various categories it tracks within this category. We use data from Rosstat and the Ministry of Economic Development, adjusted by us to exclude capex on upstream gas. We combine the latter with other capex in the gas value chain, such as that undertaken on treatment, refining and transportation. Furthermore, capex by Transneft (including Transnefteprodukt) on crude oil and refined products transportation is sourced from Transneft’s consolidated IFRS financials. We note that the capex figures shown exclude funds spent on investment, including sizeable sums used for M&A in recent years.
Industry-wide capex decreased slightly by 1% in 2018
Figure 77: Oil & gas sector capex, $mn (unless otherwise stated)
|
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
YoY |
Oil |
23,824 |
32,424 |
40,129 |
34,598 |
47,159 |
47,450 |
54,813 |
61,594 |
49,893 |
33,408 |
29,343 |
38,051 |
33,629 |
-11.6% |
Upstream |
15,546 |
21,997 |
29,231 |
21,827 |
30,408 |
30,790 |
38,005 |
40,398 |
28,707 |
20,131 |
18,281 |
25,246 |
21,923 |
-13.2% |
Refining |
2,377 |
3,432 |
4,863 |
5,388 |
8,092 |
8,071 |
10,009 |
13,862 |
12,665 |
7,808 |
5,757 |
7,665 |
7,067 |
-7.8% |
Transneft |
5,338 |
6,371 |
6,035 |
7,383 |
8,659 |
8,589 |
6,799 |
7,334 |
8,520 |
5,470 |
5,305 |
5,140 |
4,639 |
-9.8% |
Transnefteprodukt |
563 |
624 |
|
|
|
|
|
|
|
|
|
|
|
|
Gas |
16,242 |
19,418 |
24,199 |
18,664 |
27,085 |
50,358 |
36,939 |
30,115 |
26,017 |
16,015 |
15,666 |
19,675 |
23,637 |
20.1% |
Total |
40,066 |
51,841 |
64,327 |
53,262 |
74,244 |
97,808 |
91,752 |
91,709 |
75,910 |
49,424 |
45,009 |
57,726 |
57,266 |
-0.8% |
Note: 2016,2017 are restated according to new Russian classification
Source: Rosstat and the Ministry of Economic Development for upstream and refining data, Transneft (and Transnefteprodukt) for transportation data, Gazprom and Renaissance Capital estimates for gas data
Upstream oil capex decreased by 13.2% YoY in 2018 driven by the 8% depreciation of the rouble during the year and the slowdown of domestic investments as a result of the OPEC+ output restrictions. Investments in greenfields continued to be supported by efforts on the part of the Russian government to stimulate oil output via reductions in MET and export duty rates, which now apply to an even higher number of oil fields (we discuss recent changes to the tax regime on pages 146-163).
Upstream oil capex decreased 13% YoY in 2018
Refining capex decreased by 7.8% in dollar terms in 2018 on the rouble depreciation (and was broadly flat in rouble terms), as the incremental increase based on the higher Gazprom Neft’s capital expenses on its second phase of Omsk and Moscow refineries modernisation compensated for the reductions in the capex of other VICs as their modernisation programme has mostly wound down. Refining capex in 2018 was 49% below the 2013 peak and we believe its level has now stabilised.
Refining capex decreased by 8% in 2018
Transneft’s consolidated 2018 capex (including Transnefteprodukt) was down by 9.8% YoY following the completion of most of its recent expansion projects for both crude and oil product pipelines.
We estimate that capex in the gas sector increased by 20.1% YoY in 2018, driven by Gazprom’s capex increase of 15% last year (excluding capex of Gazprom Neft and its power business) as Gazprom continued to invest in the construction of the Power of Siberia, Nord Stream 2 and the TurkStream pipelines. We expect Gazprom’s dollar capex to decrease slightly YoY in 2019, driven by our expected reduction in transportation capex as its key pipeline construction projects are coming to an end. NOVATEK’s capex more than doubled in 2018.
The oil & gas sector achieved an all-time-high capex level in 2011. We believe the surge in capex over 2010-2011 and its subsequent decline over 2014-2017 to the current level was driven predominantly by the following factors:
▪Volatility in the RUB/$ exchange rate.
Transneft’s consolidated 2018 capex (including Transnefteprodukt) was down by 10% YoY
Gas sector capex was up by 20% in 2018
75
vk.com/id446425943
Renaissance Capital 20 June 2019
Russian oil & gas
▪Improved oil & gas economics on the back of a more flexible tax regime, allowing for higher netbacks and free cash flow.
▪A major focus on greenfield development in 2007-2014, particularly in new production provinces such as East Siberia and the Caspian, with greenfield investments requiring less capex in recent years.
▪Accelerated spending on refinery upgrades in view of the introduction of new motor fuel standards.
▪Significant swings in European gas prices over the past 10 years and resulting changes to Gazprom’s capex plans, augmented by significant investments in
NOVATEK’s LNG programme.
Figure 78: Total capex by company, $mn (unless otherwise stated)
|
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
YoY |
2019E |
YoY |
1Q18 |
1Q19 |
YoY |
Oil companies |
26,147 |
28,409 |
37,227 |
44,714 |
43,406 |
40,622 |
27,348 |
27,353 |
33,722 |
31,272 |
-7% |
33,455 |
12%* |
7,768 |
6,586 |
-15% |
Rosneft |
7,252 |
8,989 |
12,789 |
15,228 |
17,575 |
13,873 |
9,713 |
10,296 |
14,507 |
13,374 |
-8% |
17,121 |
21%* |
3,562 |
2,860 |
-20% |
LUKOIL |
5,156 |
5,423 |
6,589 |
9,366 |
10,964 |
11,397 |
6,224 |
5,027 |
6,295 |
5,866 |
-7% |
5,876 |
0% |
1,687 |
1,173 |
-30% |
SurgutNG |
4,292 |
3,880 |
4,943 |
5,068 |
4,911 |
4,335 |
3,068 |
3,006 |
3,243 |
2,725 |
-16% |
3,380 |
24% |
561 |
512 |
-9% |
TNK-BP |
2,596 |
2,625 |
5,250 |
5,630 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Gazprom Neft |
2,607 |
3,219 |
3,742 |
5,109 |
5,275 |
6,125 |
4,915 |
5,288 |
5,673 |
5,432 |
-4% |
5,170 |
-5% |
1,131 |
1,258 |
11% |
Tatneft |
2,812 |
2,572 |
1,800 |
1,635 |
1,783 |
1,629 |
1,516 |
1,427 |
1,457 |
1,560 |
7% |
1,908 |
22% |
352 |
293 |
-17% |
Slavneft |
844 |
1,209 |
1,263 |
1,151 |
1,435 |
1,585 |
735 |
814 |
1,010 |
1,118 |
11% |
n.a. |
n.a. |
291 |
272 |
-7% |
Russneft |
n.a. |
n.a. |
n.a. |
536 |
507 |
420 |
164 |
266 |
442 |
393 |
-11% |
n.a. |
n.a. |
n.a. |
n.a. |
n.a. |
Bashneft |
589 |
492 |
851 |
991 |
955 |
1,258 |
1,013 |
1,229 |
1,094 |
806 |
-26% |
n.a. |
n.a. |
184 |
219 |
19% |
Gazprom |
20,816 |
30,296 |
55,373 |
42,158 |
39,234 |
31,393 |
21,953 |
20,056 |
25,795 |
28,612 |
11% |
27,976 |
-2% |
5,091 |
4,495 |
-12% |
NOVATEK |
512 |
745 |
1,122 |
1,266 |
1,813 |
1,515 |
727 |
463 |
635 |
1,437 |
126% |
2,773 |
93% |
187 |
651 |
247% |
Transneft |
7,383 |
8,659 |
8,589 |
6,799 |
7,334 |
8,520 |
5,470 |
5,305 |
5,140 |
4,639 |
-10% |
4,488 |
-3% |
1,100 |
1,002 |
-9% |
Note: Surgutneftegas data include estimates.
Tatneft data include investments in the TANECO refinery.
Gazprom’s capex excludes Gazprom Neft’s capex.
LUKOIL and Gazprom Neft capex excludes international investments. Rosneft excludes Zohr investment and Bashneft. 2019 data are forecasts. *2019 YoY figures are adjusted on the capex of non-covered or consolidated companies
Source: Company data, Renaissance Capital estimates
Figure 79: Upstream capex by company, $mn (unless otherwise stated)
|
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
YoY |
2019E |
YoY |
1Q18 |
1Q19 |
YoY |
Oil companies |
18,251 |
20,094 |
26,211 |
31,037 |
30,571 |
29,514 |
21,250 |
22,153 |
27,707 |
26,142 |
-6% |
26,747 |
8%* |
5,722 |
4,633 |
-19% |
Rosneft |
5,867 |
6,398 |
8,195 |
9,111 |
10,357 |
9,110 |
7,444 |
8,878 |
12,601 |
11,981 |
-5% |
14,573 |
15%* |
3,289 |
2,578 |
-22% |
LUKOIL |
3,855 |
3,911 |
5,132 |
7,085 |
8,325 |
8,533 |
4,770 |
4,234 |
5,408 |
4,765 |
-12% |
4,783 |
0% |
1,407 |
993 |
-29% |
SurgutNG |
3,388 |
3,280 |
4,110 |
4,518 |
4,590 |
4,128 |
2,852 |
2,643 |
2,894 |
2,969 |
3% |
3,076 |
4% |
n.a. |
n.a. |
n.a. |
TNK-BP |
2,336 |
2,335 |
4,385 |
4,852 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
Gazprom Neft |
2,021 |
2,430 |
2,401 |
2,924 |
4,520 |
5,017 |
4,166 |
3,660 |
3,839 |
3,631 |
-5% |
3,573 |
-2% |
735 |
764 |
4% |
Tatneft |
518 |
616 |
697 |
827 |
861 |
655 |
611 |
798 |
621 |
727 |
17% |
742 |
2% |
167 |
148 |
-12% |
Slavneft |
81 |
902 |
802 |
686 |
936 |
709 |
440 |
765 |
1,028 |
1,008 |
-2% |
n.a. |
n.a. |
n.a. |
n.a. |
n.a. |
Russneft |
n.a. |
n.a. |
n.a. |
536 |
507 |
420 |
164 |
266 |
442 |
393 |
-11% |
n.a. |
n.a. |
n.a. |
n.a. |
n.a. |
Bashneft |
184 |
222 |
490 |
498 |
475 |
943 |
802 |
908 |
874 |
669 |
-23% |
n.a. |
n.a. |
123 |
152 |
23% |
Gazprom |
6,897 |
7,087 |
9,809 |
7,801 |
8,436 |
6,756 |
3,595 |
3,455 |
3,711 |
4,907 |
32% |
5,247 |
7% |
557 |
629 |
13% |
NOVATEK |
512 |
745 |
1,122 |
1,305 |
1,277 |
1,428 |
681 |
392 |
421 |
741 |
76% |
1,429 |
93% |
117 |
230 |
96% |
Note: Surgutneftegas data include estimates.
Gazprom’s capex excludes Gazprom Neft’s capex.
LUKOIL and Gazprom Neft capex excludes international investments. Rosneft excludes Zohr investment and Bashneft. 2019 data are forecasts. 2019 data are forecasts.
*2019 YoY figures are adjusted for the capex of non-covered or consolidated companies
Source: Company data, Renaissance Capital estimates
Upstream oil capex is decreasing…
According to Rosstat and the Ministry of Economic Development data adjusted for the estimate of oil & gas services, Russian upstream capex decreased by 13% to $21.9bn in 2018. Data collected from annual and MD&A reports suggest that total upstream spending by major Russian oil VICs decreased by 6%, which is generally in line with the Rosstat figure (adjusted for upstream gas and Transneft capex). While upstream capex growth estimates may vary, the trend was certainly negative in 2018, with Tatneft and Surgutneftegas being the only VICs to increase their expenditures in Russia, which we attribute to the delays in greenfield projects start-ups and fewer investments in sustaining
2018 capex decreased driven by the less appetite for spending driven by OPEC+ deal
76
vk.com/id446425943
Renaissance Capital 20 June 2019
Russian oil & gas
the brownfields production as a result of the OPEC+ deal. We note that in rouble terms the oil sector demonstrated positive growth of 1.5% in 2018, which is also supported by the flat YoY drilling statistics in 2018.
We estimate spending on drilling by Russian oil companies represents approximately 40% of their overall upstream capex, with the balance related to other items, principally access infrastructure for new fields and gathering and treating facilities.
For 2019, we forecast upstream capex for Russian oil companies to increase on average by 8% YoY adjusted for the capex of the non-covered companies (Figure 79). We forecast NOVATEK will see the fastest growth in capex (+93%) driven by its LNG strategy, while Rosneft will see its investments grow 15% as it launches a number of greenfields in 2019. We believe Tatneft, Surgutneftegas, and Gazprom will increase their capex by 2%, 4% and 7%, respectively, while LUKOIL should maintain capex at a flat level YoY. At the same time, we forecast lower YoY capex Gazprom Neft (-2%) in dollar terms.
We do not expect that higher estimated capex in 2019 marks the reversal in the overall upstream spending trends for Russian oils. Benefiting from substantial reserve base (with 25 years of proven reserves life) and the industry’s lowest development costs (Figure 41), there is no urgent need to ramp up capital expenditure, particularly as Russia has committed to production cuts under OPEC+ deal. At the same time, the industry is looking for new avenues of investments, if not to support actual production growth but to improve margins via focus on new tax advantaged production regions (Figure 134). The combination of high reserves, production constraints and international sanctions (see Appendix IV) will keep Russian oil producers focussed on FCF generation to reduce debt and support higher levels of redistribution of profits to their shareholders in form of dividends and buyback programmes, in our view.
In Figure 80 we provide a comparison between per-unit capex spending ($/boe) of international majors and Russian oil companies. Our analysis shows that the gap has narrowed considerably as international majors slashed their capex budgets significantly from 2016 in response to the oil price decline. Russian per boe capex declined by c. 14% in 2018, while international majors (represented by Exxon, Shell, BP, Chevron and Total) saw their per-unit capex rise 6% last year. Adjusted for changes in purchasing power parity (PPP), Russian oil companies were actually spending more than international majors per unit of output – $14.7/boe vs $13.3/boe in 2018.
We forecast 8% higher upstream capex in 2019
Figure 80: Upstream capex – Russian oils vs international oil majors, $/boe
|
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
International oil majors |
7.7 |
7.5 |
9.2 |
11.9 |
12.8 |
17.5 |
15.4 |
16.8 |
22.6 |
23.4 |
29.0 |
26.2 |
21.4 |
14.7 |
12.6 |
13.3 |
Russia |
2.5 |
2.7 |
2.5 |
4.4 |
6.1 |
8.2 |
6.0 |
8.2 |
8.2 |
10.0 |
10.6 |
7.5 |
5.2 |
4.6 |
6.3 |
5.4 |
PPP-adjusted |
4.9 |
5.4 |
5.0 |
7.8 |
10.3 |
11.5 |
10.6 |
12.8 |
12.4 |
19.0 |
18.3 |
14.1 |
13.2 |
11.2 |
14.7 |
14.2 |
Exploration-adjusted |
5.2 |
6.0 |
5.2 |
8.6 |
11.3 |
12.2 |
11.6 |
13.0 |
12.9 |
20.8 |
20.2 |
14.9 |
14.0 |
11.7 |
15.4 |
14.7 |
Source: Company data, Ministry of Energy, The Economist, Bloomberg, Renaissance Capital
…as well as refining capex
According to Rosstat and the Ministry of Economic Development, in 2018 capex in the |
Refining capex lower |
refining segment decreased by 7.8% YoY to $7,067mn, following c. 33% growth in 2017. |
|
Based on Rosstat data, annual refining capex saw a 53% decline from the peak level of |
|
$13.9bn in 2013, following a more than sixfold increase compared with 2005. The 2016 |
|
Rosstat statistics for the upstream sector appear to be in line with what the companies |
|
reported, yet we believe that individual company data much better reflect actual spending |
|
trends in the refining segment. |
|
77
vk.com/id446425943
Renaissance Capital 20 June 2019
Russian oil & gas
As discussed in the Refining section, Russian oil VICs have been encouraged to speed up the modernisation of their refineries owing to new fuel standards, excise tax pressures and the re-balancing of export duties on crude and refined products, which makes heavy product exports unprofitable (or marginally profitable) for the majority of Russian refineries. The companies achieved substantial progress in their refinery modernisations, a process that has slowed down considerably over recent years due to a decline in refining margins.
A more than sixfold increase in refining capex (in 2005-2013) allowed Russian oil companies to overtake (during 2010-2015) their international peers in terms of per-unit of throughput capex (see Figure 81). However, in 2016, per barrel refining capex again turned below the level of international majors as Russian VICs all but completed their respective modernisation programmes. The PPP adjustment here is less appropriate, in our opinion, as refinery upgrades in Russia increasingly rely on foreign technology.
Figure 81: Refining capex – Russian oils vs international oil majors, $/bl
|
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
International oil majors |
1.7 |
1.8 |
2.1 |
2.5 |
3.2 |
3.9 |
3.9 |
2.7 |
3.1 |
3.4 |
3.9 |
3.5 |
3.0 |
3.3 |
3.4 |
3.9 |
Russia |
0.6 |
1.0 |
1.0 |
1.5 |
2.1 |
2.8 |
3.1 |
4.4 |
4.3 |
5.1 |
7.0 |
6.0 |
3.8 |
2.8 |
3.8 |
3.4 |
PPP-adjusted |
1.3 |
2.0 |
1.9 |
2.6 |
3.5 |
4.0 |
5.5 |
6.9 |
6.5 |
9.7 |
12.0 |
11.3 |
9.6 |
6.9 |
8.7 |
8.9 |
Source: Company data, Ministry of Energy, The Economist, Bloomberg, Renaissance Capital
Transportation capex on the way down
Transneft, the crude and product pipeline operator, posted a 9% YoY decline in its 2018 |
Transportation capex to decelerate |
capex to $4.8bn, following a 3% reduction in 2017. This was 46% below the peak level |
|
reached in 2011 with the company’s lower capex reflecting the end of its mega-projects. |
|
Today, Transneft operates a mix of pipelines, which include a legacy core of the system |
|
constructed in the Soviet Union, prior to Transneft’s incorporation in 1993, with no new |
|
pipelines having been built in 1993-1999. The company’s investment strategy since 1999 |
|
has focused on eliminating the capacity deficit that existed in the late 1990s, while |
|
reducing dependency on transit states. This was achieved through the completion of two |
|
Ukraine bypasses, in 2000 and 2001, as well as the construction of a new major pipeline |
|
route to Primorsk (the Baltic Pipeline Systems, BPS). |
|
Figure 82: Russia – Transneft crude oil pipelines
|
Primorsk |
|
|
|
|
|
|
Ust-Luga |
|
|
|
|
|
|
|
Andreapol |
|
Usa |
|
|
|
|
|
|
|
|
Zapolyarye |
|
|||
|
|
|
|
|
|
||
Moscow |
Yaroslavl |
|
|
|
|
|
|
Unecha |
Nizhny Novgorod |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Ryazan |
Lazarevo |
|
|
Purpe |
|
Lensk |
|
|
|
Surgut |
|
|
||
Nikolskoye |
|
Perm |
|
Konda |
|
Kuyumba |
|
|
|
|
Samotlor |
|
|||
|
Klin |
|
|
|
|
Aldan |
|
|
Ufa |
|
|
|
|
|
|
Novorossiysk |
|
Tyumen |
|
Parabel |
|
Skovorodino |
|
|
|
|
|
||||
|
|
|
|
|
|||
|
Samara |
Salavat |
|
Yurgamysh |
|
|
Bratsk |
|
|
|
|
|
|
|
|
Tikhoretsk |
|
|
|
|
Omsk |
|
|
|
|
|
|
|
|
|
|
Tuapse |
|
|
|
|
Tomsk |
Aanzhero- |
Tayshet |
|
|
|
|
|
Sudzhensk
Irkutsk |
Kozmino |
|
Source: Transneft
78
vk.com/id446425943
Renaissance Capital 20 June 2019
Russian oil & gas
In the decade that followed Transneft’s incorporation, the main focus was on the diversification of its export routes, which culminated in the commissioning of the Phase 1 of the East Siberia-Pacific Ocean (ESPO) pipeline in December 2009, estimated at a cost of $11.2bn. In 2010, Transneft focused on the second phase of the ESPO project – the Skovorodino-Kozmino pipeline and the port facility in Kozmino. In addition, the company constructed the BPS-2 pipeline (from Unecha to Ust-Luga), which complemented BPS (Yaroslavl-Primorsk) and reduced Russia’s dependence on oil transits via Belarus and potential transit tariff disputes. Both the BPS-2 and ESPO-2 pipelines were launched in 2012. In 2016 the company completed two other big projects – Zapolyarnoye-Purpe and Kuyumba-Taishet, leading to further capex reductions in 2017 and 2018. We expect capex to decline to maintenance levels of c. $4.0bn by 2020 as the company’s key expansion projects are completed. The company’s only major remaining project in oil transportation is the ESPO expansion and the construction of related links to Kozmino port and Komsomolsk refinery, scheduled for completion in 2019. Following an active investment programme over the past 12 years and the resulting significant increase in
Transneft’s overall capacity and flexibility, we now expect a relatively quiet phase in the company’s investment cycle.
We note that Transnefteprodukt – Russia’s product pipeline operator – has been consolidated in Transneft’s financials since 2008. Therefore, our capex estimates include expenditure related to Transnefteprodukt with two major projects recently completed. The $750mn South (Yug) product pipeline (Volgograd-Novorossiysk) was completed in 2018 ahead of its originally scheduled 2021 following the change in plans to connect Rosneft’s refineries in Syzran and Saratov. Simultaneously with the construction of the Yug pipeline, Novorossiysk Commercial Sea Port (NMTP) upgraded its terminal capacity at Sheshkaris to handle gasoil exports. A smaller $600mn Sever (North) project was completed in 2017 and resulted in the expansion of diesel export capacity to Primorsk port from 8.5mn tpa to 25mn tpa. There was also a similar-scale ($600mn) project to de-bottleneck and diversify product pipelines delivering gasoline, diesel and jet fuel into the Moscow region, completed in 2018.
Figure 83: Russia – refined product pipelines
Primorsk
Moscow
Ry azan
|
Penza |
|
Ekaterinburg |
|
|
Volgograd |
Ufa |
Ty umen |
|
Nov orossiysk |
Samara |
|||
|
||||
|
Tikhoretsk |
|
Omsk |
|
|
|
|
Kemerov o |
Source: Transneft
79
vk.com/id446425943
Renaissance Capital 20 June 2019
Russian oil & gas
Gas capex to level off in 2019
According to data from Rosstat and the Ministry of Energy, adjusted as necessary from Gazprom’s reports and accounts, we estimate that capex in the gas segment increased by 20% YoY to $23.6bn in 2018. We project that Gazprom accounted for around 89% of this estimated total, down from 90% in 2017.
The transportation segment accounted for 36% of Gazprom’s total capex in 2018 (excluding Gazprom Neft), on our estimates (up from 33% in 2017), whereas gas production capex represented 17% of the company’s total. The company’s major projects in the transportation segment were the Power of Siberia, Gruazovets-Vyborg (a feed for Nord Stream 2), as well as Nord Stream 2 and TurkStream pipelines. All of these pipeline projects are nearing completion, which is why we expect 16% lower transportation capex from Gazprom in 2019. A substantial amount continues to be allocated for the reconstruction and technical refurbishment of gas transportation facilities in order to improve the reliability of the UGSS.
In the area of gas production, capital spending increased by 32% in 2018 to $4.9bn. We expect gas production capex to increase further in 2019E – to $5.2bn, to support the company’s field development activities in East Siberia and Yamal, the regions of future gas production growth for Gazprom.
We expect that Gazprom’s total capex will moderate over the next three years with our estimate of 2% lower spend in 2019. The main reason for this is the scheduled completion in 2019 of main gas transmission system (GTS) expansion projects, with the construction of the Power of Siberia route and completion of scheduled Ukraine bypasses. Offsetting these reductions are a likely increase in spend on gas processing facilities, including the ongoing construction of a $15bn Amur gas processing plant (GPP, scheduled for completion in 2024) as well as a similarly expensive new GPP/LNG facility in Ust-Luga. Both projects will require further expansions of the Power of Siberia and BovanenkovoUkhta pipelines at a cost of $13bn between 2019-2021, we estimate. At present, Gazprom is funding these investments from its gas export profits, given low gas pipeline tariffs. We believe this status quo satisfies all major stakeholders, including the Russian government and the independent gas producers: if the GTS were independent from Gazprom today, it would have needed a much higher gas transportation tariff to fund its capex, in our view.
We estimate gas capex was up 20% in 2018 but the spend will level off in 2019
Gazprom’s capex likely to flatten over the next three years
Figure 84: Gazprom capex by segment, excluding Gazprom Neft, $mn (unless otherwise stated)
|
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019E |
YoY |
Total |
6,223 |
3,905 |
5,571 |
19,974 |
25,505 |
18,146 |
27,159 |
52,062 |
44,965 |
46,296 |
37,043 |
21,953 |
20,056 |
25,795 |
28,612 |
27,976 |
-2.2% |
Transport |
411 |
586 |
760 |
7,737 |
9,971 |
7,601 |
13,991 |
30,780 |
22,743 |
14,764 |
13,530 |
6,870 |
6,070 |
8,547 |
10,198 |
8,577 |
-15.9% |
Production of gas |
5,812 |
3,319 |
4,811 |
7,263 |
9,009 |
6,897 |
7,087 |
9,809 |
9,205 |
9,954 |
7,972 |
3,595 |
3,455 |
3,711 |
4,907 |
5,247 |
6.9% |
Refining |
0 |
0 |
0 |
1,516 |
2,032 |
1,309 |
2,592 |
4,750 |
5,501 |
4,227 |
3,954 |
2,225 |
2,883 |
3,861 |
4,930 |
4,797 |
-2.7% |
Distribution |
0 |
0 |
0 |
1,529 |
1,399 |
856 |
1,237 |
1,744 |
1,972 |
2,255 |
1,178 |
1,215 |
1,154 |
1,532 |
932 |
912 |
-2.1% |
Other |
0 |
0 |
0 |
1,929 |
3,093 |
1,484 |
2,252 |
4,979 |
5,543 |
15,096 |
10,410 |
8,048 |
6,494 |
8,143 |
7,646 |
8,443 |
10.4% |
NOVATEK’s capex increased by 126% to $1.4bn in 2018 following a 37% rise in 2017. We expect this will nearly double to 93% in 2019, driven by the company’s investments in its LNG strategy, including Arctic LNG 2 and the new LNG construction centre in Murmansk.
Source: Company data, Renaissance Capital estimates
NOVATEK’s capex increased by 126% in 2018 and will nearly double in 2019, we think
80
vk.com/id446425943
Upstream capex by company
Renaissance Capital
20 June 2019
Russian oil & gas
Figure 85: Upstream capex by company, $mn
|
|
|
|
CDU-TEK data |
|
|
|
|
Company data |
|
||
|
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019E |
Rosneft* |
6,619 |
6,639 |
7,097 |
8,478 |
8,351 |
10,709 |
10,063 |
7,670 |
8,878 |
12,601 |
11,981 |
14,573 |
LUKOIL |
4,400 |
3,399 |
3,434 |
4,313 |
5,582 |
7,075 |
7,901 |
4,416 |
4,234 |
5,408 |
4,765 |
4,783 |
SurgutNG |
3,739 |
3,405 |
3,600 |
5,409 |
4,715 |
5,217 |
4,577 |
3,153 |
2,643 |
2,894 |
2,969 |
3,076 |
Bashneft |
454 |
246 |
253 |
304 |
189 |
297 |
840 |
600 |
908 |
874 |
669 |
n.a. |
Gazprom Neft |
868 |
604 |
769 |
611 |
785 |
778 |
682 |
520 |
3,660 |
3,839 |
3,631 |
3,573 |
Slavneft |
241 |
81 |
902 |
802 |
686 |
936 |
709 |
440 |
765 |
1,028 |
1,008 |
n.a. |
Tatneft |
575 |
412 |
448 |
518 |
1,030 |
1,392 |
506 |
362 |
798 |
621 |
727 |
742 |
Russneft |
262 |
117 |
272 |
540 |
503 |
605 |
331 |
190 |
266 |
442 |
393 |
n.a. |
TNK-BP |
1,963 |
1,666 |
2,860 |
3,824 |
4,328 |
- |
- |
- |
- |
- |
- |
- |
Oil companies |
19,121 |
16,570 |
19,634 |
24,798 |
26,169 |
27,008 |
25,610 |
17,350 |
22,153 |
27,707 |
26,142 |
26,747 |
Note: Upstream capex estimate for 2018E includes only companies covered by Renaissance Capital. *Including Bashneft in 2019
Source: CDU TEK, Company data, InfoTEK, Neftyanaya Torgovlya, Renaissance Capital estimates
Figure 85 shows upstream capex by company as reported by NGV and Neftyanaya Torgovlya, which use CDU-TEK data as their source, and by the companies themselves. We note that upstream capex data are no longer published (2015 is the last year for which full-year data are available) after Rosneft stopped providing capex data to CDU-TEK. CDU-TEK data reflected expenditure estimates by Russian oil VICs, which they attribute to drilling, construction and other expenses related to the upstream segment. These figures as reported to the Ministry of Energy and state statistics agencies (Rosstat) may differ substantially from the consolidated expenditure figures reflected in IFRS financials and MD&A reports (Figure 85, rhs). We note that CDU-TEK data and company data do not match perfectly due to differences in methodologies. Numbers for Gazprom Neft differ the most, as data reported by CDU-TEK include only one subsidiary – Noyabrskneftegaz.
According to data reported by the companies in their IFRS financial statements/MD&As, upstream capex decreased by 5.6% in 2018. Rosneft continued to be the leader by absolute spending, with upstream capex of $12,650mn, of which $669mn is attributed to Bashneft, we estimate. Rosneft was followed by LUKOIL and Gazprom Neft, which spent $4,765mn and $3,631mn, respectively. In 2019 we expect companies in our coverage universe to increase total upstream capital investment by 8.1%, led by Rosneft increasing its capex by 15%, on our estimates.
Figure 86 illustrates that Gazprom Neft, Slavneft, Rosneft and LUKOIL had the largest upstream capex per unit of production (2018 upstream capex of $10.8/bl, $10.0/bl, $8.2/bl and $8.0/bl of crude oil and condensate production, respectively). Russneft was in fourth place with $7.6/bl, followed by Surgutneftegas with $6.7/bl. Bashneft and Tatneft were at the bottom of the list, with per-unit capex of $4.8/bl and $3.4/bl, respectively.
Figure 86: Upstream capex by company per unit of output, 2014-2018, $/bl of crude oil and condensate production
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
|
|
|
|
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Gazprom Neft |
Slavneft |
Rosneft |
LUKOIL |
Russneft |
SurgutNG |
Bashneft |
2014-2015 figures are based on CDU-TEK data. Slavneft data include only Megionneftegas. Gazprom Neft data include only Noyabrskneftegas. 2016-2018 figures are based on company data.
Source: Ministry of Energy, InfoTEK, NGV, Neftyanaya Torgovlya, Company data, Renaissance Capital
In 2018, VICs decreased their upstream capex by 5.6%
81
vk.com/id446425943
Exploration drilling
In 2018, exploration drilling volumes increased by 8% YoY to 1,067 km, following growths of 8% and 12% in 2017 and 2016, respectively.
Figure 87: Exploration drilling by company, km (unless otherwise stated)
Renaissance Capital
20 June 2019
Russian oil & gas
Exploration drilling volumes increased by 8% in 2018
|
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
YoY |
4M18 |
4M19 |
YoY |
Rosneft |
48.8 |
26.5 |
66.0 |
74.6 |
81.0 |
66.4 |
170.7 |
110.7 |
201.6 |
293.4 |
278.9 |
-5% |
84.1 |
54.6 |
-35% |
SurgutNG |
169.2 |
182.8 |
221.8 |
216.3 |
222.3 |
215.0 |
202.7 |
206.4 |
197.3 |
201.8 |
211.5 |
5% |
71.2 |
79.4 |
12% |
LUKOIL |
118.9 |
61.7 |
97.3 |
119.2 |
180.8 |
197.8 |
231.2 |
167.2 |
181.5 |
209.8 |
193.0 |
-8% |
61.0 |
62.7 |
3% |
Gazprom Neft |
74.4 |
18.4 |
63.1 |
56.3 |
56.0 |
48.7 |
38.9 |
65.3 |
31.6 |
32.4 |
114.7 |
254% |
19.0 |
29.5 |
55% |
Bashneft |
34.0 |
10.5 |
6.8 |
26.7 |
27.6 |
39.5 |
50.5 |
40.8 |
91.6 |
50.2 |
48.0 |
-4% |
15.7 |
7.7 |
-51% |
Tatneft |
62.1 |
47.2 |
27.1 |
21.1 |
31.8 |
27.8 |
28.1 |
16.8 |
13.7 |
25.3 |
26.6 |
5% |
1.5 |
6.4 |
327% |
Slavneft |
56.9 |
11.5 |
31.9 |
15.9 |
25.8 |
24.2 |
60.4 |
25.6 |
12.7 |
10.4 |
10.1 |
-3% |
3.7 |
10.7 |
189% |
Russneft |
24.0 |
5.6 |
0.0 |
14.9 |
5.7 |
3.2 |
4.2 |
3.8 |
0.6 |
3.2 |
0.0 |
-100% |
0.0 |
1.4 |
n.a. |
TNK-BP |
114.9 |
37.6 |
82.9 |
97.2 |
80.9 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
n.a. |
0.0 |
0.0 |
n.a. |
Russia |
851.7 |
464.4 |
701.0 |
747.0 |
804.0 |
817.3 |
993.9 |
817.7 |
914.0 |
987.5 |
1,066.9 |
8% |
292.3 |
316.8 |
8% |
Source: Ministry of Energy, Interfax, InfoTEK, Renaissance Capital
Data for 4M19 suggest a further 8% increase YoY. Looking beyond the OPEC+ deal, large oil producers continue to focus on sustaining declining production at brownfields, and applying efforts to access previously undiscovered or unreachable reserves. By volume of exploration drilling in absolute and relative terms, Rosneft continues to hold the first place in exploration drilling, although its volumes were down 5% in 2018. Surgutneftegas increased its exploration drilling by 5% YoY, taking second place in terms of exploration footage from LUKOIL, which was down by 8% in 2018. Rosneft accounted for 26.1% of the sector total in 2018, while LUKOIL and Surgutneftegas accounted for 18.1% and 19.8%, respectively.
Gazprom Neft’s exploration drilling footage surged to 115 km in 2018 from 32 km in 2017 (+254% YoY), 103% above the five-year average. Tatneft marginally increased its drilling, by 5% to 26.6 km after an impressive increase of 85% in 2017. Bashneft decreased exploration drilling volumes by 4% in 2018 following a 45% decline in 2017. Slavneft reduced its exploration footage by 3% and Russneft reduced its exploration drilling to zero in 2018, according to CDU-TEK.
On a per-unit basis, Surgutneftegas maintained its leadership with 3.5 metres/kt of crude oil (+4% YoY), while Bashneft declined from its peak of 4.3 metres/kt in 2016 to 2.5 metres/kt in 2018. Gazprom Neft drilled 2.5 metres/kt of oil output, a 251% increase YoY, slightly above LUKOIL’s 2.4 metres/kt. Rosneft, Russia’s largest oil company in terms of crude output, decreased 8% YoY (1.4 metres/kt). Tatneft marginally increased its per-unit- of-output exploration footage by 3% (to 0.9 metres/kt of output) while Slavneft increased by 1% (to 0.7 metres/kt of output).
Figure 88: 2014-2018 exploration drilling per unit of oil output (metres/kt)
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
|
|
|
|
|||||
|
|
|
|
|
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
SurgutNG |
Bashneft Gazprom Neft LUKOIL |
Rosneft |
Tatneft |
Slavneft |
Russneft |
Source: Ministry of Energy, Interfax, InfoTEK, Renaissance Capital
82
vk.com/id446425943
Development drilling
Development drilling in Russia remained flat last year (27,635 km), following a 12% increase in 2017, maintaining the new post-Soviet record for the Russian oil & gas sector. Major integrated Russian oils drilled 25,141mn metres in 2018, which represents a 2% decrease YoY.
Renaissance Capital
20 June 2019
Russian oil & gas
With 27.6mn development metres drilled in 2018, Russia maintained a new post-Soviet record, reached in 2017
Figure 89: Development drilling by company, km (unless otherwise stated)
|
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
YoY |
4M18 |
4M19 |
YoY |
Rosneft |
3,016 |
3,690 |
4,301 |
6,029 |
5,248 |
6,986 |
9,446 |
11,954 |
12,026 |
1% |
3,893 |
3,356 |
-13.8% |
SurgutNG |
4,208 |
4,530 |
4,687 |
4,944 |
4,103 |
4,329 |
4,500 |
4,687 |
4,846 |
3% |
1,496 |
1,562 |
4.5% |
LUKOIL |
2,275 |
2,489 |
3,404 |
3,555 |
3,768 |
2,759 |
2,455 |
2,956 |
2,992 |
1% |
1,048 |
917 |
-12.5% |
Gazprom Neft |
2,762 |
2,461 |
2,662 |
3,109 |
2,979 |
3,141 |
2,884 |
2,860 |
2,494 |
-13% |
721 |
743 |
3.0% |
Slavneft |
941 |
781 |
663 |
1,010 |
1,105 |
1,316 |
1,654 |
1,421 |
1,477 |
4% |
450 |
616 |
37.0% |
Russneft |
334 |
559 |
384 |
367 |
421 |
302 |
418 |
556 |
472 |
-15% |
171 |
176 |
2.7% |
Bashneft |
234 |
121 |
53 |
109 |
298 |
438 |
473 |
394 |
426 |
8% |
144 |
127 |
-11.4% |
Tatneft |
464 |
488 |
489 |
424 |
382 |
908 |
916 |
813 |
409 |
-50% |
150 |
128 |
-15.0% |
TNK-BP |
1,636 |
1,890 |
1,657 |
0 |
0 |
0 |
0 |
0 |
0 |
n.a. |
0 |
0 |
nm |
Russia |
16,506 |
17,995 |
19,734 |
20,840 |
19,777 |
22,065 |
24,680 |
27,648 |
27,635 |
0% |
8,797 |
8,443 |
-4.0% |
Source: Ministry of Energy, Interfax, InfoTEK, Renaissance Capital
Rosneft moved into first position after the acquisition of TNK-BP, increasing its development drilling volumes by a further 1% YoY to 12,026 km in 2018. Surgutneftegas was the second largest, with 4,846 km (+3% YoY). LUKOIL ranked third with 2,992 km (+1% YoY), followed by Gazprom Neft, which drilled 2,494 km (-13% YoY). Elsewhere, Slavneft and Bashneft increased annual development drilling footage by 4% and 8%, respectively, while, Tatneft and Russneft decreased it by 50% and 15%, respectively.
Rosneft leads the industry with a 1% increase in development drilling in 2018
Last year, Slavneft ranked as the leader in development drilling per unit of output (106.9 metres/kt, +8% YoY), followed by Surgutneftegas (79.6 metres/kt, up 3% YoY) and Russneft (66.3 metres/kt, down by 16% YoY). Rosneft and Gazprom Neft were fourth and fifth with 59.9 metres/kt (-2% YoY) and 54.2 metres/kt (-14% YoY). LUKOIL, Bashneft and Tatneft ranked at the bottom, with 36.4 metres (+1% YoY), 22.5 metres (+18%) and 13.8 (-51%) metres drilled per kt of oil output, respectively.
Figure 90: 2014-2018 development drilling per unit of oil output (metres/kt)
2014 2015 2016 2017 2018
120.0
100.0
80.0
60.0
40.0
20.0
0.0
Slavneft SurgutNG Russneft Rosneft Gazprom LUKOIL Bashneft Tatneft Neft
Source: Ministry of Energy, Interfax, InfoTEK, Renaissance Capital
Slavneft has the highest drilling intensity per unit of output
It is visible from Figure 91 that oil wells in Russia are becoming more complex. The average drilling length has increased by 32% vs 2010. On a company-by-company basis, Tatneft has the shallowest wells with an average well length of just 0.9 km, while
Slavneft’s wells were the deepest – 7.3 km on average in 2018.
Russian wells are becoming longer and more complex
83
vk.com/id446425943
Renaissance Capital 20 June 2019
Russian oil & gas
Figure 91: Development drilling footage in 2010-2018 by company, km/well (unless otherwise stated)
|
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
YoY |
Oil companies |
3.0 |
3.0 |
3.3 |
3.8 |
3.7 |
4.1 |
4.1 |
4.0 |
4.0 |
2% |
Slavneft |
4.2 |
3.6 |
2.6 |
6.0 |
5.3 |
7.0 |
9.6 |
7.9 |
7.3 |
-8% |
Rosneft |
3.0 |
3.1 |
3.4 |
3.7 |
3.6 |
4.2 |
4.4 |
4.6 |
4.4 |
-3% |
Gazprom Neft |
3.5 |
3.0 |
3.5 |
4.4 |
3.8 |
4.4 |
4.1 |
4.1 |
4.3 |
4% |
SurgutNG |
3.5 |
3.2 |
3.5 |
3.9 |
3.9 |
4.0 |
3.9 |
4.2 |
3.8 |
-9% |
LUKOIL |
2.9 |
3.4 |
3.3 |
3.6 |
3.6 |
3.8 |
3.6 |
3.8 |
3.8 |
2% |
Russneft |
2.7 |
3.3 |
2.8 |
4.0 |
4.2 |
4.1 |
4.1 |
4.6 |
3.7 |
-20% |
Bashneft |
1.6 |
1.4 |
1.3 |
2.4 |
3.4 |
3.1 |
3.3 |
3.0 |
3.5 |
18% |
Tatneft |
1.4 |
1.5 |
1.6 |
1.7 |
1.6 |
2.9 |
1.9 |
1.0 |
0.9 |
-3% |
TNK-BP |
2.7 |
2.8 |
3.4 |
– |
– |
– |
– |
– |
– |
– |
Source: Ministry of Energy, InfoTEK, Interfax, Renaissance Capital
Russian development drilling volumes decreased by 4.0% in 4M19 compared with 4M18. |
Drilling volumes decreased in 4M19 |
Slavneft was the leader in terms of volume growth, increasing development drilling by |
|
37%, followed by Surgutneftegas (+4.5%), Gazprom Neft (+3.0%) and Russneft (+2.7%). |
|
Bashneft, LUKOIL and Rosneft decreased their development drilling footage by 11.4%, |
|
12.5% and 13.8% in 4M19, respectively. Tatneft demonstrated a sharpest decline among |
|
the oil companies – down 15% YoY. |
|
Figure 92: Russian 4M19 development drilling volumes, metres (unless otherwise stated)
|
4M18 |
4M19 |
YoY |
Oil companies |
8,072 |
7,625 |
-5.5% |
Rosneft |
3,893 |
3,356 |
-13.8% |
SurgutNG |
1,496 |
1,562 |
4.5% |
LUKOIL |
1,048 |
917 |
-12.5% |
Gazprom Neft |
721 |
743 |
3.0% |
Slavneft |
450 |
616 |
37.0% |
Russneft |
171 |
176 |
2.7% |
Tatneft |
150 |
128 |
-15.0% |
Bashneft |
144 |
127 |
-11.4% |
Russia total |
8,797 |
8,443 |
-4.0% |
Source: Ministry of Energy, Interfax, Renaissance Capital
Whereas increased drilling was a sizeable contributor to crude output growth in the earlier phase of Russia’s crude output revival (in 2000-2001), we have observed a lower correlation in the subsequent years. We see more focus on better and more technologically intensive wells that are capable of delivering higher flow rates. This means that pure well count is no longer a strong indicator of production trends, although the correlation does exist.
Over the past few years, Russia has successfully re-engineered traditional (Soviet) methods of hydrocarbon development through the use of best-in-class technologies and equipment. Although the ‘brownfield miracle’ of the past decade has fallen from the limelight (with the launch of several significant new greenfields recently), we believe it is far from over. Higher overall drilling footage helps to improve recovery rates, but new wells now also yield higher flow rates, as discussed below, with the resulting effect of improved efficiencies and performance.
Figure 93 summarises the relationship between drilling activity and non-M&A production volume growth. Among the large oil VICs, Rosneft, LUKOIL and Surgutneftegas increased their development drilling volumes over 2017-2018, achieving a positive production growth rates in 2018. Russneft increased its drilling volumes in 2017 more than it decreased it in 2018, increasing production by 1.4% in 2018. Tatneft reduced its development drilling at 2018 which didn’t affect its growth in production. A marginal rebound (+4%) in development drilling volumes by Slavneft in 2018 after a reduction of 14% in 2017 was not able to reverse a negative 3.4% decline in output. The growth in Gazprom Neft new greenfields was partially offset by the curbs in growth of the brownfields, while the company managed to achieve an overall increase in 2018 output
84
vk.com/id446425943
Renaissance Capital 20 June 2019
Russian oil & gas
(+0.8%) despite lower drilling volumes. The 8% increase in Bashneft development drilling in 2018 was not enough to offset the change in the production at its Trebs & Titov field and a 17% lower drilling volumes in the previous year.
Figure 93: Drilling volume growth vs crude oil and condensate production growth
100.0%
80.0%
60.0%
40.0%
20.0%
0.0% -20.0% -40.0% -60.0%
2017 development drilling |
2018 development drilling |
2018 organic production (RHS) |
||||
|
|
|
|
|
|
4.0% |
|
|
|
|
|
|
2.0% |
|
|
|
|
|
|
0.0% |
|
|
|
|
|
|
-2.0% |
|
|
|
|
|
|
-4.0% |
|
|
|
|
|
|
-6.0% |
|
|
|
|
|
|
-8.0% |
|
|
|
|
|
|
-10.0% |
Rosneft |
Tatneft |
Russneft |
Gazprom SurgutNG |
LUKOIL |
Slavneft |
Bashneft |
|
|
|
Neft |
|
|
|
Source: Ministry of Natural Resources, Rosnedra, Renaissance Capital
85