Russian Federation upstream: what to look for in 2016

2016 will be a tough year for the Russian upstream industry. The low oil price, taxation changes, EU/US sanctions, geopolitical risk and a volatile rouble exchange rate will all continue to be challenges. However, maintaining oil production at its current level is a core target from the State, and the depreciation of the rouble will continue to give some protection against low oil prices to upstream players. For 2016, we expect output to remain robust at 10.76 million barrels per day. In the oil sector, Asian companies signed a number of agreements in 2015. How many of these deals will actually close in 2016 is an important indicator as to how serious the often-cited 'Pivot to the East' is. In the gas sector, Gazprom will face increasing challenges on the domestic market and slow negotiations abroad.