Insight

After the crash – what's changed in Russia and Caspian upstream?

11 June 2020

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11 June 2020

After the crash – what's changed in Russia and Caspian upstream?

Report summary

The oil price crash has had a dramatic impact on Russia and Caspian’s upstream sector. Our outlook is transformed by a combination of OPEC+ oil production cuts, decreased investment and longer-term risks from demand and price uncertainty. Powered by our Lens platform, we evaluate how our latest regional outlook contrasts with our pre-crash view. This reveals the severity of cuts to investment, production and valuation. • Liquids production - cut almost 10% in 2020. How do our models reflect the allocation of OPEC+ oil commitments? • Investment - cut 17%, in US dollar terms, in 2020-21. What will drive capex cuts in the near term? • Valuation - down more than 25% (base case NPV10). Which companies suffer the most? • Major capital projects – almost all 2020 FIDs deferred. What are the new timelines? • Coronavirus pandemic - more than 1,000 cases at Chevron’s Tengizchevroil megaproject. What are the risks for Kazakhstan’s giant expansion phase?