March brought a price correction to the oil market after four months of continuous growth, with prices retreating from the local highs of more than $70 to $60 per barrel of Brent crude oil, according to the recent issue of AK&M Information Agency's "RUSSIAN INDUSTRIES: PRODUCTION, FINANCE, SECURITIES. Oil and gas production, oil refining" monthly paper (No. 1418) dated April 14, 2021.
Oil prices floated roughly in the same range over the past few weeks as investors try to assess the impact of the renewed rise in the number of coronavirus cases globally on demand recovery prospects. Nevertheless, oil prices resumed growth early in the second ten-day interval of April, exceeding $66 per barrel. In investors' eye, the higher pace of vaccination has a positive impact on the cost of raw materials. Overall, despite the persisting concern, the market stays upbeat as regards an "exit from the pandemic."
The OPEC+ participants surprised the market deciding to increase production quotas. After an arduous discussion, the OPEC ministers agreed on the need to restore production and on a production recovery trajectory for OPEC countries for 3 months at once (May, June and July 2021). Thus, 800,000 barrels per day will return to the market. In July 2021, production cuts will be further eased to bring them to the 5.8 million bpd level initially stipulated by the OPEC agreement.
For the three months of 2021, oil and gas condensate production in Russia reached 125.06 million tonnes decreasing by 10.9% year-on-year. In March 2021, Russia produced 43.34 million tonnes of oil with gas condensate (-9.3% YoY).
Looking at companies, NOVATEK was the only major ramping up production in January-March 2021 (+1.7%), according to majors' consolidated financial statements. Surgutneftegas saw the biggest decline (-13.3% YoY). In March, daily production of oil with condensate in Russia was 10.25 mbpd on average.
In 1Q21, Russia's gas production reached 197.71 billion cubic meters (+6.6% YoY). In March 2021 alone, Russia produced 66.66 bcm of gas (+12.1% YoY). NOVATEK remained the leader in gas production among independent domestic producers, with 3-month production increasing by 5.6% to 20.15 bcm. Gazprom increased production by 10.5% to 136.2 bcm during the same period.
In January 2021, Russia's oil export revenues decreased by 42.8% year-on-year to reach $5.708 billion. In physical terms, oil exports decreased by 27.1% to 15.849 million tonnes. In January 2021, oil exports from Russia decreased by 12.4% versus December 2020, while revenues dropped by 3.1%. According to estimates by the Central Dispatching Department of Fuel Energy Complex (CDU TEK), 3-month oil exports decreased by 17.5% year-on-year to 52.89 million tonnes.
An in-depth segment review is provided in issue 1418 of the "RUSSIAN INDUSTRIES: PRODUCTION, FINANCE, SECURITIES. Oil and gas production, oil refining" monthly paper dated April 14, 2021.
