Oil prices kept growing for fourth month in a row in February

AK&M 16 March 2021 12:58

Oil prices kept growing steadily for the fourth month in a row in February, with a stronger hike in the first days of March bringing oil prices close to the $70 mark breaking through this level intra-day, 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. 1398) dated March 10, 2021.

The decision of the OPEC+ member countries to postpone the production increase in April sparked supply shortage concerns in the market. However, the risk is a possible stagnation in refining in the Atlantic basin due to weather factors and signs of growing reserves in the United States and China pose risks to this trend and may cause a price correction to $65 and below.

In the two months of 2021, oil and gas condensate production in Russia amounted to 81.6 million tonnes decreasing by 11.9% year-on-year. In February 2021, Russia produced 38.56 million tonnes of oil with gas condensate, which is 13.7% below the February 2020 result. Looking at companies, majors were unable to ramp up oil production in January-February 2021, according to their consolidated financial statements. NOVATEK saw the weakest decline (-0.3% YoY), while Surgutneftegas's production dropped the most (-14.2%). In February 2021, average daily oil with condensate production in Russia reached 10.095 mmbod.

2-month gas production in Russia reached 130.66 billion cubic meters (bcm) in 2021 growing by 3.8% year-on-year. In February 2021, the Russian Federation produced 62.04 bcm of gas (+2.9% YoY). A number of companies increased production this year, with NOVATEK being in the lead in gas production among independent Russian producers (2-month production growing by 8.3% to 12.51 bcm). Gazprom Neft increased production by 3.4% to 3.78 bcm during the same period.

In 2020, Russia's revenues from oil exports decreased by 40.8% versus 2019 to reach $72.366 billion, according to information from Russia's Federal Customs Service. 12-month oil exports from Russia decreased by 11.4% to 238.61 million tonnes. In December 2020, oil exports from Russia decreased by 8.7% against the previous month to 18.1 million tonnes, while revenues decreased by 0.4% to $5.888 billion. According to preliminary estimates by the Central Dispatching Department of Fuel Energy Complex (CDU TEK), oil exports from Russia in January-February 2021 decreased by 17.4% year-on-year to 35.191 million tonnes.

Russia's revenues from natural pipeline gas exports for 2020 decreased by 39.6% year-on-year to $25.247 billion. Gas exports for 12 months of 2020 dropped by 9.7% to 199.2 bcm. In December 2020, gas exports increased by 7.6% to 19.7 bcm, revenues from exports increased by 8.4% to $3.085 billion. In 2020, Russia increased LNG exports by 4.5% year-on-year to 68.3 bcm. Russia's LNG export revenues for the same period decreased by 14.8% year-on-year to $6.746 billion. In December 2020, LNG exports decreased 3 times versus November to 3.1 bcm, revenues from LNG exports dropped by half to $264.4 million. According to preliminary estimates, in January-February 2021, Gazprom supplied 34.5 bcm of gas to non-CIS countries, which is 32.5% above the 2-month result in 2020.

An in-depth segment review is provided in issue 1413 of the "RUSSIAN INDUSTRIES: PRODUCTION, FINANCE, SECURITIES. Oil and gas production, oil refining" monthly paper dated March 10, 2021.