Russia 2012 Review

Table of contents

• Executive Summary
• Rosneft enters a league of one
  • Gazprom stumbles
  • NOVATEK rises
  • The Russian oil majors have a mixed year
    • LUKOIL slows its slide
    • Surgutneftegaz, Tatneft and Bashneft inch upwards
  • Unconventionals enter the frame
  • A vintage year for pipeline construction
  • Oil Production
  • Gas Production
  • Preliminary figures from the Ministry of Energy show well-head gas production dropped 2.1% from 2011. Gazprom was the largest faller with a 6.8% drop. The bulk of the drop coming from the throttling back of production at Yamburgskoye, Urengoiskoye and Gazprom Dobycha Noyabrsk. In contrast the younger giants such as Zapolyarnoye and South Russkoye continued to produce at near full capacity, Zapolyarnoye becoming Russia's largest producing gas field. European exports were down 0.98 bcfd to 13.4 bcfd - as a result of a slight fall in demand and Gazprom's continued volume restraint to protect gas prices, particularly in NW Europe. Gazprom's ability to deal with large swings in demand at peak times was also put under scrutiny in February, when very cold conditions in Russia and Europe meant that Gazprom was stretched to fulfil its contracts.
  • Lifting costs flat in Roubles, falls in Dollars.
  • Tax policy
    • The state relies heavily on hydrocarbon tax revenue to finance the Federal Budget (around 40% in 2012). A high revenue-based upstream tax system has dissuaded development of new fields, as it does not reward risk-taking in high cost developments. Recognising that oil production needs incentives to extend the plateau above 10 million b/d, the state has introduced tax breaks on a field by field basis, to encourage production. In 2012 there were three new tax regimes to encourage hard to recover oil development, and several field or company exceptions introduced.
    • Key Themes

Tables and charts

This report includes 6 images and tables including: